Roth conversion date for tax purposes

[lem1955]

I initiated a Roth conversion 12/30/16. The settlement date was 1/03/17. Did the Roth conversion happen in 2016 or 2017? I received a 1099-R from Vanguard for my Traditional IRA. It does not show anything for the Roth conversion. Will there be a forthcoming 1099-R for the Roth account? I made no distributions from the Roth account.

 

[bongo2]

Good question. I suggest you call Vanguard and let us know the result. I would guess that since Dec 30th was a Friday (did you do it early in the day?) and you already got a 1099 that didn't show the conversion that it happened in 2017. But it's possible they will send you a revised 1099.

 

[bingybear]

I've not done it a Vanguard, but have done it with two other major discount brokerages. I set mine up online. Once was by transferring cash, the other in kind by moving CEF shares. Shortly after instructing the move, the shares or cash were in the other account. The 1099R for these showed the same day. If you did a change by requesting someone to do the change, then it would really depend on when they did the move. I'm not sure about doing in kind with MF as their price is figured well after the market is closed. That might cause a slip too.

I'm curious what you find out. Definitely give Vanguard a call to see what they say. Also, go look at your account statements. What day is the move of assets recorded on?

 

[misanman]

My Roth conversions at Fidelity (done online) have always shown up immediately. Not sure why there would be a delay.

 

[LOL!]

I initiated a Roth conversion 12/30/16. The settlement date was 1/03/17. Did the Roth conversion happen in 2016 or 2017? I received a 1099-R from Vanguard for my Traditional IRA. It does not show anything for the Roth conversion. Will there be a forthcoming 1099-R for the Roth account? I made no distributions from the Roth account.

You don't get a 1099-R unless you remove money or assets from the IRA, so you will not get any 1099-R from the Roth for this conversion. The 1099-R you got from the tIRA is the Roth conversion. You can tell by the code on it.

The Roth will have a 5498 though which you never report on your tax return, but the IRS checks that you really did contribute to this Roth IRA. The 5498 will not be available until later in the year since IRA contributions for 2016 can be made until tax deadline in April. Note I wrote "IRA contributions" and not "Roth conversions."

As for bingybear 1099-R showing up the same day, I don't understand that since if one did a conversion say in January 2017, one would not get a 1099-R until 2018. And one can do multiple conversions from the the same tIRA and there would be only one single 1099-R for that tIRA. So I must've misunderstood what bingybear reported.

In other words, the 1099-R shows the year of conversion(s), but not the actual date of the conversion(s). Your statements of transactions show the date(s).

 

[bingybear]

You don't get a 1099-R unless you remove money or assets from the IRA, so you will not get any 1099-R from the Roth for this conversion. The 1099-R you got from the tIRA is the Roth conversion. You can tell by the code on it.

The Roth will have a 5498 though which you never report on your tax return, but the IRS checks that you really did contribute to this Roth IRA. The 5498 will not be available until later in the year since IRA contributions for 2016 can be made until tax deadline in April. Note I wrote "IRA contributions" and not "Roth conversions."

As for bingybear 1099-R showing up the same day, I don't understand that since if one did a conversion say in January 2017, one would not get a 1099-R until 2018. And one can do multiple conversions from the the same tIRA and there would be only one single 1099-R for that tIRA. So I must've misunderstood what bingybear reported.

In other words, the 1099-R shows the year of conversion(s), but not the actual date of the conversion(s). Your statements of transactions show the date(s).

Not the 1099-R showing up the same day. The transfer of assets showed up the same day. The OP notes the date he initiated his conversion and the date it settled. I don't recall having a settlement date for my conversions. It all happened the same day... asset transferred and able to be used.

The 1099-R does take a little while to process. I don't think I said I got a 1099-r same day, but the assets were transferred same day.

 

[pb4uski]

Call Vanguard to confirm but they date should be the date that the funds were transferred out of your tIRA since that is the taxable event. It should be 12/30/16 unless you did the transaction after 4pm, in which case it may be the next trading day, which would be 1/3/17.

 

[braumeister]

When I did a conversion at Vanguard this year, the trade date and settlement date were the same, so no question about it. I would also like to know how the OP's conversion was viewed by Vanguard.

 

[lem1955]

This morning with a fresher mind I went to my transaction history and reconciled my Distributions and withholdings to the 1099-R I received from Vanguard. These are my findings - the Roth conversion did in fact have identical trade date and settlement date. (I had thought a different transaction of similar amount was the conversion yesterday.) The Roth conversion is included in Box 1 Gross distribution on the tIRA 1099-R. Turbo-Tax asks if any part of the total distributions were Roth conversions and I will answer yes and input the amount there. Thanks all for weighing in. I hope this follow up is helpful to others.