How can an individual convert a traditional IRA to a Roth IRA?
A traditional IRA can be converted to a Roth IRA by: Rollover – A distribution from a traditional IRA can be contributed to a Roth IRA within 60 days after distribution. Trustee-to-trustee transfer – The financial institution holding the traditional IRA assets will provide directions on how to transfer those assets to a Roth IRA with another financial institution. Same trustee transfer – As with the trustee-to-trustee transfer, the financial institution holding the traditional IRA assets will provide directions on how to transfer those assets to a Roth IRA. In this case, things should be simpler because the transfer occurs within the same financial institution. A conversion results in taxation of any untaxed amounts in the traditional IRA. Also, the conversion is reported on Form 8606, Nondeductible IRAs.
A traditional IRA can be converted to a Roth IRA by: Rollover – A distribution from a traditional IRA can be contributed to a Roth IRA within 60 days after distribution. Trustee-to-trustee transfer – The financial institution holding the traditional IRA assets will provide directions on how to transfer those assets to a Roth IRA with another financial institution. Same trustee transfer – As with the trustee-to-trustee transfer, the financial institution holding the traditional IRA assets will provide directions on how to transfer those assets to a Roth IRA. In this case, things should be simpler because the transfer occurs within the same financial institution. A conversion results in taxation of any untaxed amounts in the traditional IRA. Also, the conversion is reported on Form 8606, Nondeductible IRAs. For more information on to save for your retirement the U.S. Securities and Exchange Commission offers a roadmap to help you get started with savings and investing properly. Sources:
