Jay wrote:

- quote -

You've done your homework well. On the right track.

- quote -

Right. must be done in the calendar year, i.e. you must
have the funds "invested" by Dec 31st.

- quote -

It don't matter where you get the money to pay the tax.
Just be sure to roll over 100% of the IRA funds.

- quote -

Nope. However as a practical matter, determine which of
your (many?) IRAs are underperforming and select from these
to do the rollover.

- quote -

Just keep good records. Be sure to do the rollover in the
allotted sixty days. Note on the envelope containing the
check (if not a trustee to trustee transfer) as to date of
receipt, just in case.

And if you use Windows XP, make sure you've downloaded and
installed the patch.

Cheer$,
Harlan Lunsford, EA in LA

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- quote -

In the context of the OP, conversion, it is a simple
question if they file a joint return. There's no difference
between his and hers. If they file separate returns neither
can convert.

Phil Marti
Topeka, KS

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Jay wrote:

- quote -

A. Yes
B. A "failed conversion" (or even a successful one) can
be recharacterised by October 15. You already knew about
recharacterizations, as you noted in the side text of the
question. I don't see much of a "mess" there.

I don't recall the exact subject, but I had asked whether
a 2002 Roth IRA contribution could be recharacterised
(in 2003) to a traditional IRA and then converted to a Roth,
assuming both the 2002 income requirements for a deductible
IRA contribution and the 2003 income requirements for a
conversion are met. The consensus was "yes", if the first
step were done by October 15, 2003, and the second by
December 31, 2003 (before it would be known precisely
if the 2003 income requirements were met.) The first
recharacterization would be irreversable, but the
conversion might still be recharacterized in 2004.

- quote -

Yep.

- quote -

IRAs are individual -- your IRA and your wife's are separate,
and subject to separate minimum and maximum distribution
requirements. This is not a simple question.

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Jay <itsjay_97plus1_DoTheMath[at]yahoo.com> writes:

- quote -

Yes.

- quote -

Yes, conversions are different. It's part of simplification.

- quote -

You're confused about what constitutes a failed conversion.
(Small wonder) If you convert in 2003 and then find that
your AGI was too high, you have until 10/15/2004 to
"recharacterize," or undo the conversion. This is a simple
process. You then must wait 30 days before you can do
another conversion. Not meeting that waiting period would
be a failed conversion.

- quote -

Correct. Just make sure when you do the conversion that you
tell the custodian that you want no withholding.

- quote -

No.

- quote -

No. Once the funds are in a SEP IRA, they behave like any
other funds in a traditional IRA.

- quote -

None that I can think of. Custodians are pretty experienced
in the process. Just make sure you check all confirmations
to make sure that what you wanted done is what they did.

Phil Marti
Topeka, KS

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"Jay" <itsjay_97plus1_DoTheMath[at]yahoo.com> wrote:

- quote -


1. Must be done by 12/31/03 to count for '03

2. Tax should come from other funds to make it worthwhile.
If you take it from the IRA, you get hit for 10% additional
tax if you are under 59½.

3. No tax difference; you need to decide if you or your
wife having a Roth is a bigger advantage. No difference
between a SEP or regular IRA.

4. Recharacterizations are no big deal if you convert into
a completely separate Roth, rather than an existing one.

Barry Picker, CPA/PFS, CFP

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"Jay" <itsjay_97plus1_DoTheMath[at]yahoo.com> wrote:

- quote -

Conversions are calendar year events.

- quote -

Any amount coming from the IRA would be subject to early
withdrawal penalty and would not be a part of the
conversion.

- quote -

The source is not relevant.

--
David M. Woods, EA
Boston, MA 02109

Postings here are general information only and not to be
relied upon as advice.

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A traditional IRA has been building over the years, and I'm
considering converting some of it to a Roth. I don't expect
to withdraw from the IRA for years, and figure that it'd
better to accumulate tax-free. I've been reading IRS Pub 590
to learn about this. For example, 590 says that I'd have to
pay tax on the amount converted in the year of converting.
So I'd convert bit by bit over several years to hold down
any one year's tax bill. So much for background; now for a
few questions.

1. If I want a conversion to count for tax year 03, does it
have to be done during the 03 calendar year? (If so it'd be
different from contributions or recharacterizations. For
these, up to the tax filing date is ok.) The problem is not
knowing until 04 about eligibility to do a conversion.
Having a "failed conversion" looks like a mess.

2. I presume that the tax on the converted amount doesn't
come from the IRA; it comes from regular funds. Is that
right? (I wouldn't want to do an IRA withdrawal to pay the
tax if I could avoid it.)

3. Does it make any difference between my IRA and my wife's
for converting? (One is bigger than the other.) Does it make
any difference if a SEP IRA is drawn on, rather than a
traditional one?

4. Are there major pitfalls to avoid?
Other suggestions? ... [polite ones preferred ;-) ]

Thanks!

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