Slott Report Mailbag: Can I Convert SEP IRA Funds to a Roth IRA?

Thursday, April 10, 2014

By Joe Cicchinelli, IRA Technical Expert

Follow Me on Twitter: @JoeCiccEdSlott

This week’s Slott Report Mailbag focuses on a SEP IRA conversion to a Roth IRA. It’s an interesting question (one we don’t get often), so we decided to put a spotlight on the issue in this week’s mailbag. As always, we stress the importance of working with a competent, educated financial advisor to keep your retirement nest egg safe and secure. Find one in your area at this link.

1.

I want to contribute to SEP IRA through an LLC that I own. Once in the SEP IRA account, I want to convert it to Roth IRA. Is that workable? Should I be careful of any issue?

Answer:
IRA funds, including SEP IRA funds, can be converted to a Roth IRA. As long as you are not age 70 ½ or older this year, all of your SEP IRA funds can be converted to a Roth IRA. If you are going to make future contributions to the SEP IRA you should leave enough money in the account to keep it open. There are many issues involved in whether or not you should convert to a Roth IRA. The good news is, if you later decide the conversion was not the right move for you, you can unconvert (recharacterize) some or all of your conversion by October 15th of the year after you did the conversion. Please see our website to locate an Ed Slott trained Elite IRA advisor to discuss your situation.

 

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