ROTH Rollover

[Burke]

TP has existing ROTH, but makes too much money to contribute this year. Wants to do a traditional, non-deductible IRA and then immediate rollover. Has no other deductible/non-deductible IRA's. Can the current IRA, once established, be rolled over into the existing ROTH or does he have to take out a new ROTH? There would be different holding periods.

[Burke]

Anybody got an opinion?

[John of PA]

I would think any Roth, why would it have to be a new Roth? I have a client that does this every year and it is cummulating in one Roth. The Traditional IRA get cleaned out every year, it does not have a chance to earn anything becasue he does the conversation the next day. Hope this helps.

[FEDUKE404]

Can you do that ?

I would think any Roth, why would it have to be a new Roth? I have a client that does this every year and it is cummulating in one Roth. The Traditional IRA get cleaned out every year, it does not have a chance to earn anything becasue he does the conversation the next day. Hope this helps.

1 - Are you sure that's entirely legal and/or above board?

2 - What about the Forms 1099-R that, I assume, are still generated (each year) ?

FE

[Burke]

I would think any Roth, why would it have to be a new Roth? I have a client that does this every year and it is cummulating in one Roth. The Traditional IRA get cleaned out every year, it does not have a chance to earn anything becasue he does the conversation the next day. Hope this helps.

Thanks. That is the way I was leaning. Now, I know the holding period is 5 years. Does that start anew with each year's additions?

[Burke]

1 - Are you sure that's entirely legal and/or above board? 2 - What about the Forms 1099-R that, I assume, are still generated (each year) ?
FE

If any forms are generated, they would show a rollover. And yes, its legal. It's a loophole, but its legal.

[Gene V]

Thanks. That is the way I was leaning. Now, I know the holding period is 5 years. Does that start anew with each year's additions?

I'm not sure if the 5 years start with each conversion, however, it does seems to start new with the first conversion. TTB 13-14 Example on top of right column. This pertain to the 10% early withdrawal penalty.