Please forgive. I believe I’ve read all relevant posts but still unsure.
Question: I’m retired, age 73, no W-2 income. I have 15 shares GOOG in my TIRA, current value approx $33K. Can I convert (if that’s the right word) those shares into my Roth IRA?
My thinking is that GOOG is cheap now, and so it’d be a good time to move it into the Roth. Thanks.
PS: I did a conversion some years ago easily through Schwab, including paying required fed/state tax. There’s plenty of cash in the TIRA to cover taxes (or I can pay them with other cash).
I’m retired, age 73, no W-2 income. I have 15 shares GOOG in my TIRA, current value approx $33K. Can I convert (if that’s the right word) those shares into my Roth IRA?
Yes, convert is the right word, and yes, you can convert those shares by doing an ‘in-kind’ conversion, which will move the shares directly to your Roth IRA from the TIRA. You will need to check with your brokerage to see exactly how they will value the shares for the conversion. It may be the closing price, an average of the closing and opening price, the price at the time that the conversion was requested, or some other method.
Another way that you could do the conversion would be to sell the GOOG shares in the TIRA, then convert the cash proceeds of the sale, and purchase GOOG shares in the Roth IRA. If you are trading GOOG in taxable accounts within 30 days before or after your trades in the IRAs, you will need to watch out for wash sale issues.
I did a conversion some years ago easily through Schwab, including paying required fed/state tax. There’s plenty of cash in the TIRA to cover taxes (or I can pay them with other cash).
Yes, you will owe Federal and state taxes on the amount converted. Be aware if you use cash out of the TIRA to pay the taxes, that will also be a taxable distribution, so you will owe additional taxes on that.
You also should be aware that the converted amount, plus any distributions you take out to pay taxes, will be included in your AGI. Depending on your other income, those distributions may push you over thresholds for IRMAA and/or NIIT.
MisterFungi: “Question: I’m retired, age 73, no W-2 income. I have 15 shares GOOG in my TIRA, current value approx. $33K. Can I convert (if that’s the right word) those shares into my Roth IRA?”
Have you taken your RMD for 2022?
IIRC, first money out is considered RMD and conversion cannot occur until RMD has been withdrawn.
See:
Q: How Do You Convert a Roth and Manage an RMD Withdrawal in the Same Tax Year?
A: For account holders who must take an RMD, the withdrawal must occur before the Roth IRA conversion.
I have not taken my RMD yet, but I’d been planning to do so. So I’ll do that right away.
AJ and JAFO, thank you so much! I will check with my tax advisor and with Schwab, but to tell you the truth, it means at least as much to me to hear it from you as from them. I’ll report back after. I’ve done everything.
I have not taken my RMD yet, but I’d been planning to do so. So I’ll do that right away.
Keep in mind that your RMD can also be taken out in-kind and transferred directly to a taxable account - that way you are not liquidating your GOOG at an inopportune time.
OP: {{{Keep in mind that your RMD can also be taken out in-kind and transferred directly to a taxable account - that way you are not liquidating}}}
“Thanks. I don’t plan to sell the shares but rather to convert them into my Roth, . . . .”
OP’s statement is meant to apply to whatever you are withdrawing as your RMD (not the GOOG shares you intend to convert). You need not withdraw cash to satisfy your RMD, you can transfer securities (even if not GOOG) in kind for your RMD and thus avoid selling in to a down market, unless of course you need the cash from the RMD.
OP: {{{Keep in mind that your RMD can also be taken out in-kind and transferred directly to a taxable account - that way you are not liquidating}}}
“Thanks. I don’t plan to sell the shares but rather to convert them into my Roth, . . . .”
OP’s statement is meant to apply to whatever you are withdrawing as your RMD (not the GOOG shares you intend to convert). You need not withdraw cash to satisfy your RMD, you can transfer securities (even if not GOOG) in kind for your RMD and thus avoid selling in to a down market, unless of course you need the cash from the RMD.
The above statements appear to be misleading or wrong. You can transfer securities to an investment account to satisfy your RMD withdrawal from your IRA. After your RMD withdrawals are complete, you can transfer your GOOG shares from your IRA to your Roth IRA to complete the conversion.
You can transfer securities to an investment account to satisfy your RMD withdrawal from your IRA. After your RMD withdrawals are complete, you can transfer your GOOG shares from your IRA to your Roth IRA to complete the conversion.
Yes, convert is the right word, and yes, you can convert those shares by doing an ‘in-kind’ conversion, which will move the shares directly to your Roth IRA from the TIRA. You will need to check with your brokerage to see exactly how they will value the shares for the conversion. It may be the closing price, an average of the closing and opening price, the price at the time that the conversion was requested, or some other method.
Reporting back. As JAFO noted, I first had to satisfy my RMD, which I did last week (transferring the required amount, in cash, from the IRA to my taxable account). Then today I phoned Schwab, and they did the conversion of 15 shares GOOG over the phone. Took 3 minutes, including the security questions. They used the price at that time. I’ll handle the associated fed taxes in my Q3 est. tax payment, which my tax guy is updating now. Schwab said they were required to withhold the state taxes (to be paid out of cash in the IRA) unless I signed some paperwork, so I let them go ahead with that withholding.
Schwab said they were required to withhold the state taxes (to be paid out of cash in the IRA) unless I signed some paperwork, so I let them go ahead with that withholding.
Once every 12 months you can do a non-trustee-to-trustee rollover. Within 60 days, you could “rollover” the amount they deducted for taxes by making an equivalent contribution.
Others will need to comment on whether the rollover could go directly to the ROTH or whether it needs to be returned to the TIRA.