Any reason to keep converted Roth Separate?

[FLSUnFIRE]

My DQOTD: I have a small non-deductible tIRA that I re-characterized in the year of investment due to a big cap gains hit while I was still working and think I'm going to go ahead and convert it to a Roth this year before it grows more and while I've got very low income.


Is there any reason I would want to keep this separate from my existing Roth? I don't plan to touch it for a long time but after 5 years the value at conversion (previously taxed plus the gain that will taxed at conversion) would all be accessible without tax/penalty as a withdrawal of contribution before 59.5, correct?


99.3% sure that I'm correct in my thinking and that there is no benefit to keeping it separate.


Thanks!

 

[Alan]

99.3% sure that I'm correct in my thinking and that there is no benefit to keeping it separate.

I am 99.4% sure that you are correct. I did something very similar the year I retired 13 years ago. Low income, converted my non-deductible IRA into an existing Roth. Couldn't see any reason to do otherwise.

 

[Lucie]

My Fidelity advisor walked me through the process and I converted it it into the existing Roth. He didn’t see any advantage to opening a second one.

 

[skyking1]

For the IRS, Roth is Roth. There is no reason to have separate buckets of Roth, unless you want to diversify how it is invested and that is not possible with your account.
We are going to do that with DW's conversions, put them in a single account for simplicity.

 

[OldShooter]

... Is there any reason I would want to keep this separate from my existing Roth? ..,

When I did my second conversion it was early in the year, so I had Schwab open a separate account for it. My thought was that if the market tanked later in the year, this would make it easy to recharacterize and convert it back into the IRA. It was a good year for the market, so I did nothing. The next year I combined my two Roth accounts and closed the temporary one. No issues with Schwab at all; they were happy to help.

From what I read, this option is no longer available but you might want to see if there are any other loopholes that you can exploit with a separate conversion account.

 

[Done]

Back when it was an option to recharacterize (undo) a Roth conversion, there was an advantage to holding newly-converted funds in a separate account. Now that recharacterizations are no longer allowed, I see no benefit. I combined all Roth IRAs into one. For my records, I keep a spreadsheet listing the contributions, conversions and (eventual) distributions by year.

 

[FLSUnFIRE]

Thanks everyone, all in line with what I thought. Not a lot of money but when tax rules are in play I feel better with the extra input/confirmation. I look forward to one less account in my portfolio when I convert it into my existing Roth as much as the future tax savings.

 

[DrRoy]

Once it's in the Roth you don't owe tax.