Roth Conversion between 2 different IRA custodians
I want to convert a portion of my traditional IRA held at ABC custodian into my existing Roth IRA held had XYZ custodian.
Should I have ABC custodian send me a check payable to me or to XYZ custodian?
ABC custodian will issue me a Form 1099R, correct?
I believe my tax preparer will need to file Form 8606 with my taxes to note the amount converted, correct?
Thanks,
Permalink Submitted by Alan - IRA critic on Tue, 2020-09-22 15:27
You might check with XYZ about them initiating a partial transfer from ABC into the current Roth (the amount you want to convert). Be sure they understand this is a conversion, so there cannot be any slip up on their end by failing to specify the partial amount to be transferred. If there is any hesitancy on their part, you can do an indirect rollover (declining withholding) and send your own check to the Roth custodian. You will get a 1099R either way, and will have to report the conversion on Form 8606 and 1040.
Permalink Submitted by Robert Gibb on Wed, 2020-09-23 14:34
I think that I’ll do the indirect rollover…have the check paid to me and then submit funds to the Roth account within 60 days. I would like to have taxes withheld from the indirect rollover….that should not matter in terms of the conversion process, correct?
Permalink Submitted by Alan - IRA critic on Wed, 2020-09-23 17:13
It means that your conversion will be less than the distribution unless you replace the withholding with other funds. The amount withheld will be subject to both tax and penalty. Best to pay the tax with your other funds if you can and decline withholding.