Is Now the Time to Convert?

Not religion, IRAs!  You get to move shares from a Trad to Roth at half the tax you would have paid had you done it in January…

8 thoughts on “Is Now the Time to Convert?

      1. Yes, we have an imbalance in our IRAs. Because she had a 401K we converted and and I had an IRA back when the limit was $1500/yr, so hers is much larger than mine as we used it for saving and I paid the house note. Now, she will have to take minimum distributions next year larger than I want to.

        I’m thinking reducing her IRA by shifting some to her Roth to reduce her minimum distribution.

        I didn’t know you could shift shares, I thought you had to cash out.

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        1. My brokerage, Vanguard, does “say” exchange although I haven’t tried it. That leads me to believe they allow me to move shares out of one account to another at market value.

          Nonetheless, what’s the difference? If it’s a no-load, selling in the Trad and then buying in the Roth using cash in the interim transfer has no effect. Same with stocks. I get $0 trades, but who charges more than $7 nowadays? Only in the case of loaded funds would you need to fret the sale/buy of the same fund.

          Also, since there’s no gain tax, wash sales don’t apply.

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      2. I missed the joke hoping there was something new in the Relief Package.

        Unfortunately the Roth conversion rules (even in a down market) don’t help this boy….

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        1. The benefit is avoiding the MRD. If you rely on the MRD as needed income then there is no difference because you can only convert withdrawals in excess of the MRD.

          That said, pulling excess will reduce the MRD in the future… kinda like overpaying your mortgage payment.

          Liked by 1 person

  1. Luckily, all of my accounts were ROTH from the jump. Paid the taxes up front and don’t have to sweat it when I have to start taking the RMD’s (MRD in Nancy’s language).

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