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Mechanics of a Roth Conversion
12-28-2018, 12:35 PM
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#1
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Thinks s/he gets paid by the post
Join Date: Mar 2004
Posts: 3,433
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Mechanics of a Roth Conversion
Need Roth conversion help, please.
After crunching my numbers thru 2018 Turbo Tax, I'm planning on doing a tIRA to Roth conversion today.
What are the mechanics?
On Vanguard, it sounds like you simply find the order screen and convert?
On Fidelity, it sounds like it's easier if execute order during the 2-hour window after market close? Per swakybaby on a recent thread: If you place the conversion order after the market closes for the day but no later than 2 hours after the market closes, you will know the exact share price and it’s clearly indicated in your Fidelity order screen. If you divide the desired dollar amount by the share price, you get the exact number of shares to convert. There’s no guesswork required.
omni
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12-28-2018, 01:04 PM
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#2
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Thinks s/he gets paid by the post
Join Date: Dec 2014
Posts: 2,511
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I'm not sure if you really need the two hour window unless you are using MF as they are priced at the end of the day. This year fido's system failed to do my conversion and had me call a number. The rep did my move for me.
So what you are trying to move from TIRA to Roth? $, MF ,stocks, bonds , ETF, CEF? And how are you planning to pay taxes?
edit - I did cash at fido and CEF as schwab this year. I had the exact amount at both places as when the move was done. At schwab that was while I was on the phone. Fido took a little longer likely because the value was fixed.
last year I moved assets at fido. The exact value did not take long to determine.
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12-28-2018, 01:08 PM
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#3
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2018
Location: Tampa
Posts: 11,298
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I converted recently using Fidelity. It was a smooth process. Didn't need a rep.
The only catch is I didn't know the exact amount until the end of the day, but wasn't trying to get it to a specific dollar vs. a small value range.
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TGIM
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12-28-2018, 01:12 PM
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#4
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Thinks s/he gets paid by the post
Join Date: Dec 2014
Posts: 2,511
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one other thing is make sure the tax withholding is as you want it. Default is they will withhold 10% I think unless you tell them otherwise.
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12-28-2018, 01:13 PM
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#5
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Thinks s/he gets paid by the post
Join Date: Mar 2004
Posts: 3,433
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Quote:
Originally Posted by bingybear
I'm not sure if you really need the two hour window unless you are using MF as they are priced at the end of the day. This year fido's system failed to do my conversion and had me call a number. The rep did my move for me.
So what you are trying to move from TIRA to Roth? $, MF ,stocks, bonds , ETF, CEF? And how are you planning to pay taxes?
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I'm just trying to move "in kind" mutual funds.
I have funds at both Vanguard or Fidelity that I can transfer.
(Taxes will be from tIRA, as I have used-up most of my taxed funds in the 12 years I've been retired. This conversion is simply to get some tIRA monies moved to Roth before the tax torpedo of RMDs and SS@70 hits me as a single person.)
omni
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12-28-2018, 01:21 PM
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#6
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Thinks s/he gets paid by the post
Join Date: Dec 2014
Posts: 2,511
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either search for the roth conversion tool @ fido if you want to do it yourself or call them and just get it done that way. I ASSUME that you conversion will be based on closing price the day you do the conversion because I've not done conversions with MF.
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12-28-2018, 01:39 PM
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#7
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Thinks s/he gets paid by the post
Join Date: Mar 2004
Posts: 3,433
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Thanks for the responses. I was able to effect the Roth conversion at Vanguard with no issues.
omni
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12-28-2018, 01:55 PM
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#8
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2006
Location: Boise
Posts: 7,882
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If you did the Roth conversion today at Vanguard it will be based on the number of shares times today's closing price. You'll be able to see the transaction tomorrow I think.
And of course, you'll get a 1099-R from Vanguard in late January I think. The taxable amount will go on Form 8606 Part II and then line 4b of the new 1040.
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"At times the world can seem an unfriendly and sinister place, but believe us when we say there is much more good in it than bad. All you have to do is look hard enough, and what might seem to be a series of unfortunate events, may in fact be the first steps of a journey." Violet Baudelaire.
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12-28-2018, 03:11 PM
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#9
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2014
Location: Spending the Kids Inheritance and living in Chicago
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Just so other readers are informed.
Some places require you to fax or mail in a paper document as they want the signature.
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Fortune favors the prepared mind. ... Louis Pasteur
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12-29-2018, 12:11 AM
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#10
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Thinks s/he gets paid by the post
Join Date: Feb 2003
Posts: 2,395
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Quote:
Originally Posted by Sunset
Just so other readers are informed.
Some places require you to fax or mail in a paper document as they want the signature.
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Yup. Filled in the form online, printed it out, signed it, and faxed mine in Wednesday morning. They won't accept an Adobe whatever electronic signature on the form. Fine with me. This is usually the only time of year that the fax section of our laserjet printer/scanner/fax gets used. Which is just often enough for me to remember HOW to use it,for the rare other times.
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Two fools dancing on the hands of time
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12-29-2018, 12:28 AM
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#11
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2008
Posts: 35,712
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Roth conversion between two of my accounts at Schwab was done with in-kind transfer of shares of ETFs and stocks. Just click to select, and the shares instantly jumped from one account to the other when I hit "confirm".
The basis reported to the IRS is based on real-time market values of the shares right at the moment I hit "confirm", the same way as buying or selling stocks with a market order.
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12-29-2018, 09:20 AM
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#12
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Thinks s/he gets paid by the post
Join Date: Mar 2004
Posts: 3,433
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I just double-checked my Vanguard account. The Roth conversion "in kind' between two of my accounts went through without a hitch.
omni
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12-29-2018, 10:24 AM
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#13
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2006
Location: Boise
Posts: 7,882
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Quote:
Originally Posted by NW-Bound
The basis reported to the IRS is based on real-time market values of the shares right at the moment I hit "confirm", the same way as buying or selling stocks with a market order.
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I believe you, but I'm a little surprised they do it that way. In other similar situations, I've seen the volume-weighted price that day, or the average of the high and the low used.
__________________
"At times the world can seem an unfriendly and sinister place, but believe us when we say there is much more good in it than bad. All you have to do is look hard enough, and what might seem to be a series of unfortunate events, may in fact be the first steps of a journey." Violet Baudelaire.
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12-29-2018, 10:42 AM
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#14
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2008
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Apparently, the IRS accepts all of the above pricing methods. I like the "instant pricing" method, because I know what the price is to a few pennies when I hit "confirm".
__________________
"Old age is the most unexpected of all things that happen to a man" -- Leon Trotsky (1879-1940)
"Those Who Can Make You Believe Absurdities Can Make You Commit Atrocities" - Voltaire (1694-1778)
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12-29-2018, 03:14 PM
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#15
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Recycles dryer sheets
Join Date: Apr 2015
Location: Austin
Posts: 106
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Quote:
Originally Posted by bingybear
one other thing is make sure the tax withholding is as you want it. Default is they will withhold 10% I think unless you tell them otherwise.
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With Vanguard, doing the conversion online did not give any option to withhold. If you wish to have amounts withhold, you must call to do the conversion.
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12-29-2018, 04:04 PM
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#16
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Thinks s/he gets paid by the post
Join Date: Mar 2004
Posts: 3,433
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Quote:
Originally Posted by Smitty700
With Vanguard, doing the conversion online did not give any option to withhold. If you wish to have amounts withhold, you must call to do the conversion.
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Not my experience^.
When I did my conversion at Vanguard yesterday, it took me to a screen where they automatically chose 10% withholding. And then it gave me the option to change it or not.
omni
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12-29-2018, 04:23 PM
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#17
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Administrator
Join Date: Jul 2005
Location: N. Yorkshire
Posts: 34,126
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Quote:
Originally Posted by omni550
Not my experience^.
When I did my conversion at Vanguard yesterday, it took me to a screen where they automatically chose 10% withholding. And then it gave me the option to change it or not.
omn
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Same here when I did my conversion at Vanguard this month.
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Retired in Jan, 2010 at 55, moved to England in May 2016
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12-29-2018, 04:56 PM
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#18
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2007
Posts: 13,227
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Quote:
Originally Posted by Alan
Same here when I did my conversion at Vanguard this month.
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Really? I saw an option to withhold, with default of 10%. As I progressed through the process, that option went away (grayed out), and I got that message that withholding was unavailable and I'd have to call if I wanted that done. Maybe we have something set up differently in our accounts.
Could it possibly be that we switched over to the brokerage accounts, and those of you that are able to withhold have not?
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12-29-2018, 10:58 PM
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#19
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Thinks s/he gets paid by the post
Join Date: Nov 2016
Location: Washington State
Posts: 2,359
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Quote:
Originally Posted by Smitty700
With Vanguard, doing the conversion online did not give any option to withhold. If you wish to have amounts withhold, you must call to do the conversion.
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I started a Roth account at Vanguard in November by converting 10K from my traditional IRA. Like you I did not see any option to withhold taxes (I seem to recall a message saying taxes could not be withheld?). In my case, it was close to the end of the year so I'll just pay the tax on my upcoming tax return. Otherwise I would probably just pay some estimated tax on the EFTPS web site.
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Mechanics of a Roth Conversion
12-29-2018, 11:07 PM
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#20
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Moderator Emeritus
Join Date: Aug 2007
Location: Northern Illinois
Posts: 16,600
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Mechanics of a Roth Conversion
Quote:
Originally Posted by omni550
Not my experience^.
When I did my conversion at Vanguard yesterday, it took me to a screen where they automatically chose 10% withholding. And then it gave me the option to change it or not.
omni
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Did you have your Roth previously set up, or did you set up your Roth and do the conversion in one swoop? I’m interested in doing a Roth conversion today if I can set up the Roth and convert easily online today.
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