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Can I re-characterize a Roth Conv if the account is closed?
Old 12-04-2015, 06:12 PM   #1
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Can I re-characterize a Roth Conv if the account is closed?

I have a Trad-IRA that is about the amount that I could convert to Roth this year. I'm thinking of converting the entire amount, so the account would be at zero.

There's a chance this will be too much, and I will want to re-char early in 2016. But would the old Roth be closed already? Would I need to open a new Roth or something?

If it's only a little over, I won;t bother. After lecturing my Mother and MIL about all these many accounts they have, I'm trying to take my own advice and simplify!

-ERD50
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Old 12-04-2015, 06:19 PM   #2
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I'd say it depends on the custodian holding your Roth, and whether they routinely close accounts with a zero balance.

In my experience most custodians keep those accounts open.

If you're really worried about it you could leave a few bucks unconverted in the Roth.
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Old 12-04-2015, 06:40 PM   #3
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I'd say it depends on the custodian holding your Roth, and whether they routinely close accounts with a zero balance.

In my experience most custodians keep those accounts open.

If you're really worried about it you could leave a few bucks unconverted in the Roth.
It's with Fidelity, I guess I'll just call them to be sure. It usually seems like they keep the accounts open for some time.

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Old 12-04-2015, 06:49 PM   #4
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but if they close the account, and you open a new one, you'll still have the same number of accounts.......unless you're also tracking closed accounts. Schwab also leaves 0 balance accounts open until you can't stand it and ask them to close it. Same w/ VG is my experience.
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Old 12-05-2015, 09:38 PM   #5
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I'm with Fidelity. I Roth convert into about 12 new Roth accounts each year. I then recharacterize the entire (or partial for the last one) Roth accounts that I don't want to keep. I recharacterize into a tIRA that I don't mind not Roth converting from until the recharacterized shares are properly aged. The first year I recharacterized into a brand new tIRA that I opened just for that purpose.

I do have a problem with Fidelity closing my empty Roth accounts after I recharacterize, despite asking them to leave the accounts open. That means I have to open another bunch of Roth accounts each year. But tracking a bunch of $0 accounts isn't a big deal.

So Fidelity may indeed close your tIRA (I don't know their exact timing), but you can open a new tIRA and recharacterize into it very easily if you need to.
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Old 12-16-2015, 07:39 PM   #6
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So Fidelity may indeed close your tIRA (I don't know their exact timing), but you can open a new tIRA and recharacterize into it very easily if you need to.
I made the conversion today, and asked beforehand. She said it would stay open for 'a few months'. I'm pretty sure I won't need to rechar anyhow, and it does sound like just opening a new one isn't a big deal.

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but if they close the account, and you open a new one, you'll still have the same number of accounts.......unless you're also tracking closed accounts. Schwab also leaves 0 balance accounts open until you can't stand it and ask them to close it. Same w/ VG is my experience.
I'm not opening a new Roth, I already have both a Roth and a tIRA at Fidelity. So if I convert the entire amount of the tIRA, it can be closed, one less account. But even if I rechar this year, I'll pull out the small remaining amount next year, and then it will be closed.

After this is done, I need to decide about rolling this and my Vanguard Roth together. Not sure which way I'll go - leaning to Fidelity though. I had generally preferred Vanguard, but when dealing with my FIL and MIL accounts, having the B&M office was an advantage.

Next year, do this dance with DW's tIRA and Roth.

-ERD50
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