Time to Consider a Roth Conversion?

By Elsie Dudukovich0 Comments
Some people find it beneficial to convert funds from a traditional IRA to a Roth IRA, known as a Roth conversion.  IRS Publication 590-A Contributions to Individual Retirement Arrangements (IRAs) is a useful reference which provides information on opening and the different ways of funding traditional and Roth IRAs.

From the IRS, there are three ways to convert funds from a traditional IRA to a Roth IRA:
  • Rollover – You receive a distribution from a traditional IRA and contribute it to a Roth IRA within 60 days after the distribution (the distribution check is payable to you);
  • Trustee-to-trustee transfer – You tell the financial institution holding your traditional IRA assets to transfer an amount directly to the trustee of your Roth IRA at a different financial institution (the distributing trustee may achieve this by issuing you a check payable to the new trustee);
  • Same trustee transfer – If your traditional and Roth IRAs are maintained at the same financial institution, you can tell the trustee to transfer an amount from your traditional IRA to your Roth IRA.”
A Roth conversion has tax implications because funds are moved from one tax environment to another. Consulting with your financial professional is important to understand and determine if a Roth conversion is appropriate for your financial goals.  Your financial professional can also help you plan for the impact of this taxable event.

The 2019 IRS deadline for Roth conversions is December 31, 2019.  While it may seem like a long way until the end of the year, a Roth conversion has the potential to be a complex undertaking – especially if you are considering converting alternative assets such as real estate.  As with any significant financial or investment decision, it is considered prudent to allow yourself ample time to consult with appropriate professionals and prepare the necessary documentation.

If you determine a Roth conversion is appropriate for you, please contact Equity Trust Company at 888-382-4727 or visit myEQUITY.com for assistance on the necessary forms and process steps to complete your request.