Roth IRA & Roth IRA Conversion
Good Morning,
Since Roth IRA Conversions cannot be recharacterized, is there any reason whatsoever to NOT commingle a Roth IRA (funded via Roth contributions) & a Roth Conversion IRA (existing from a conversion of a prior Traditional IRA)? Whether State taxes; creditor protection or any other potential reason?
Thank you.
Jason
Permalink Submitted by Alan - IRA critic on Thu, 2022-05-19 17:26
Only reason not to combine is being in a state ( or would never move to a state) that does not fully protect Roth IRAs from creditors and the converted IRA was a rollover IRA that did not hold any regular TIRA contributions. In that case, the conversion IRA would likely be protected without dollar limits in bankruptcy while the limit if combined would be 1.5mm adjusted every 3 years for inflation. As for tax considerations, the Roth owner must track their regular and conversion contribution basis and age of conversions anyway, and combining them should not hinder the ability to do that.