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Old 10-02-2016, 09:14 PM   #21
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Ask vanguard if they have a way that you can move shares. Also check to see how to set the withholding before you do. For my case I set it to no withholding. Moving share that have cleared previous transactions should be quick
I did ask to move the shares.

The withholding may be the difference. I asked for 20% to be withheld.


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Old 10-03-2016, 06:46 AM   #22
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For ETFs, if you do the conversion during market hours, what price is used? Closing price, average price for the day, market price at the time of transaction, or something else? Is this governed by IRS rules or is up to each brokerage?
Market price. I look at what the price is just before doing the move and determine the number of shares. After doing the move I check the value in the new account. I forget when I did this last year if there was a transaction listed online of the move just after. I recall talking with my Schwab rep who told me the price at which the shares were transferred. So you don't have to wait to sort out exactly the size of the conversion.

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I did ask to move the shares.

The withholding may be the difference. I asked for 20% to be withheld.


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I can't speak for Vanguard as to the slow response. Check if they have an automated method. If you are using mutual funds, I would expect the transfer to happen at the end of the day as that is the time that the mutual funds will be priced. ETFs and stocks should be able to be move during market hours.

Schwab and Fido (based on other replies) has this all online. This years conversion will be done at Fido.
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Old 10-03-2016, 09:00 AM   #23
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Originally Posted by Cobra9777 View Post
For ETFs, if you do the conversion during market hours, what price is used? Closing price, average price for the day, market price at the time of transaction, or something else? Is this governed by IRS rules or is up to each brokerage?
Market price. I look at what the price is just before doing the move and determine the number of shares. After doing the move I check the value in the new account. I forget when I did this last year if there was a transaction listed online of the move just after. I recall talking with my Schwab rep who told me the price at which the shares were transferred. So you don't have to wait to sort out exactly the size of the conversion...
Interesting. I called Fidelity yesterday and posed this same question. They said that in-kind conversions (even for individual stocks and ETFs) are valued at the closing price on the day of conversion, not the market price at time of transaction. He also said this was a Fidelity policy and that other brokerages might handle it differently. He recommended doing the transaction right before market closing if you are targeting a specific dollar amount.
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Old 10-03-2016, 09:51 AM   #24
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I did ask to move the shares.

The withholding may be the difference. I asked for 20% to be withheld.


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If you are younger than 59 1/2, won't you pay the 10% penalty on this?
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Old 10-03-2016, 09:54 AM   #25
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Fido said I could convert into a nearly identical SP500 and it would be same day.
Were you converting less than $10,000? If so, this sounds like just a change in share class.
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Old 10-03-2016, 05:59 PM   #26
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Were you converting less than $10,000? If so, this sounds like just a change in share class.

I think that is correct. This would have been funds from 401k (class k co-mingled pool) to whatever retail class I would qualify for. An exchange between tIRA and Roth would be same class. I don't think the dollar value matters.


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Old 10-03-2016, 06:04 PM   #27
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If you are younger than 59 1/2, won't you pay the 10% penalty on this?

I think not but the withholding cannot be part of the amount converted.


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Old 10-03-2016, 09:07 PM   #28
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Interesting. I called Fidelity yesterday and posed this same question. They said that in-kind conversions (even for individual stocks and ETFs) are valued at the closing price on the day of conversion, not the market price at time of transaction. He also said this was a Fidelity policy and that other brokerages might handle it differently. He recommended doing the transaction right before market closing if you are targeting a specific dollar amount.
That's my experience as well. Essentially the conversion happens after market close. Always the closing price.
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Old 10-04-2016, 01:59 PM   #29
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I think that is correct. This would have been funds from 401k (class k co-mingled pool) to whatever retail class I would qualify for. An exchange between tIRA and Roth would be same class. I don't think the dollar value matters.
It can matter. As an example, if somebody has $50K in tIRA Fido S&P 500 premium class, and Roth converts $8K of it, the $8K in the Roth will drop to investor class shares until it grows to $10K.
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Old 10-04-2016, 02:02 PM   #30
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I think not but the withholding cannot be part of the amount converted.

Example: 40 year old does a 100% Roth conversion of a $50K tIRA, but requests 20% withholding. In reality, only 80% of the withdrawal is a Roth conversion and the other 20% is a taxable withdrawal. Since they are under 59 1/2, the 20% is subject to the additional 10% penalty from the IRS.
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Old 10-04-2016, 02:03 PM   #31
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If you are younger than 59 1/2, won't you pay the 10% penalty on this?
No, no penalty on Roth conversions since you never see the money and it is still restricted.

Not sure about withholding but it may apply on that... I never do any FWT on conversions but build it into my estimated payments for the year.
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Old 10-04-2016, 03:07 PM   #32
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Example: 40 year old does a 100% Roth conversion of a $50K tIRA, but requests 20% withholding. In reality, only 80% of the withdrawal is a Roth conversion and the other 20% is a taxable withdrawal. Since they are under 59 1/2, the 20% is subject to the additional 10% penalty from the IRS.

As I mentioned you need to use other funds for withholding (or just settle up at tax time depending on your personal circumstances).


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Old 10-04-2016, 03:11 PM   #33
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It can matter. As an example, if somebody has $50K in tIRA Fido S&P 500 premium class, and Roth converts $8K of it, the $8K in the Roth will drop to investor class shares until it grows to $10K.

You may be correct but as I understand this they aggregate accounts. The difference is not significant to me so maybe I just never paid much attention.


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Old 10-04-2016, 05:25 PM   #34
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No, no penalty on Roth conversions since you never see the money and it is still restricted.

Not sure about withholding but it may apply on that... I never do any FWT on conversions but build it into my estimated payments for the year.
It is only the withholding that I was referring to. I thought that was clear from the context, but evidently not.
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Old 10-04-2016, 05:27 PM   #35
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You may be correct but as I understand this they aggregate accounts. The difference is not significant to me so maybe I just never paid much attention.
They do not aggregate amounts between accounts.
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