Roth Conversion As A 60-Day Rollover?

[Roger Fitzsimmons]

For some accounting reasons I would like to do the following, if possible:

1) Make a monthly withdrawal from an existing traditional IRA (I am over age 59 1/2).
2) Within 60 days, deposit the money in a Roth IRA and designate it as a Roth conversion.

Assume that I will find a way to pay the taxes on the withdrawn/converted amount in a timely fashion.

Is it permissible to (a) do a coversion as a 60-day rollover and (b) do multiple conversions during the year, so long as the same dollars are converted only one time each?

As a related question, is there any limitation on what you can do with funds involved in a 60-day rollover during those 60 days, as long as you get them to where they're going within 60 days?

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[Tom Russ]

On Wednesday, August 24, 2022 at 7:54:48 AM UTC-7, Roger Fitzsimmons wrote:
> For some accounting reasons I would like to do the following, if possible:
>
> 1) Make a monthly withdrawal from an existing traditional IRA (I am over age 59 1/2).
> 2) Within 60 days, deposit the money in a Roth IRA and designate it as a Roth conversion.
>
> Assume that I will find a way to pay the taxes on the withdrawn/converted amount in a timely fashion.
>
> Is it permissible to (a) do a coversion as a 60-day rollover and (b) do multiple conversions during the year, so long as the same dollars are converted only one time each?
>
> As a related question, is there any limitation on what you can do with funds involved in a 60-day rollover during those 60 days, as long as you get them to where they're going within 60 days?

It looks like you can usually only do one rollover per year from any given IRA. Although it also appears that a conversion to Roth is an exception.
See https://www.irs.gov/retirement-plans/plan-participant-employee/rollovers-of-retirement-plan-and-ira-distributions#:~:text=You%20generally%20cannot%20make%20more,the%20distribution%20was%20rolled%20over.

[Update to an earlier post when I hadn't read quite far enough down the link.]

[Tom Russ]

On Wednesday, August 24, 2022 at 7:54:48 AM UTC-7, Roger Fitzsimmons wrote:

> For some accounting reasons I would like to do the following, if possible:
>
> 1) Make a monthly withdrawal from an existing traditional IRA (I am over age 59 1/2).
> 2) Within 60 days, deposit the money in a Roth IRA and designate it as a Roth conversion.
>
> Assume that I will find a way to pay the taxes on the withdrawn/converted amount in a timely fashion.
>
> Is it permissible to (a) do a coversion as a 60-day rollover and (b) do multiple conversions during the year, so long as the same dollars are converted only one time each?
>
> As a related question, is there any limitation on what you can do with funds involved in a 60-day rollover during those 60 days, as long as you get them to where they're going within 60 days?

It looks like you can only do one rollover per year from any given IRA.

See https://www.irs.gov/retirement-plans/plan-participant-employee/rollovers-of-retirement-plan-and-ira-distributions#:~:text=You%20generally%20cannot%20make%20more,the%20distribution%20was%20rolled%20over.

[John Levine]

According to Roger Fitzsimmons <donts...@redtopbg.com>:

>For some accounting reasons I would like to do the following, if possible:
>
>1) Make a monthly withdrawal from an existing traditional IRA (I am over age 59 1/2).
>2) Within 60 days, deposit the money in a Roth IRA and designate it as a Roth conversion.
>
>Assume that I will find a way to pay the taxes on the withdrawn/converted amount in a timely fashion.
>
>Is it permissible to (a) do a coversion as a 60-day rollover and (b) do multiple conversions during the year, so long as the same
>dollars are converted only one time each?

The IRS says you can make as many rollovers from traditional to Roth
IRAs as you want, so long as the distribution from the traditional is
not an RMD or excess contribution. It's an exception to the one per
year rule that applies to other rollovers.

https://www.irs.gov/retirement-plans/plan-participant-employee/rollovers-of-retirement-plan-and-ira-distributions

>As a related question, is there any limitation on what you can do with funds involved in a 60-day rollover during those 60 days,
>as long as you get them to where they're going within 60 days?

Not that I am aware of. The main thing to be aware of is that if you
roll the full amount, you'll have to pay the taxes from other funds,
but I see you've considered that.

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Regards,
John Levine, jo...@taugh.com, Primary Perpetrator of "The Internet for Dummies",
Please consider the environment before reading this e-mail. https://jl.ly

[Roger Fitzsimmons]

So it appears that if it's a IRA withdrawal, I can opt out of witholding, but not if it's from a qualfied plan.

My high-level plan for taxes is that I will be receiving a pension starting next year and I will probably have most of the pension withheld as taxes, and if necessary I'll top this up with estimated tax payments.