By Ian Berger, JD
IRA Analyst
Question:
I really appreciate your emails and find them very helpful. Please continue the great work. I read your advice in the recent Slott Report article that IRA contributions need to be in cash, but was wondering about Roth conversions. If I do a Roth conversion from a traditional IRA, can it be done by moving shares of a mutual fund from the traditional IRA to the Roth IRA? (I would be paying the taxes out of personal funds.)
Thank you.
Answer:
We appreciate the kind words. The cash requirement discussed in the Slott Report refers only to tax-year IRA contributions. You are allowed to convert property such as shares of a mutual fund. If you are doing a Roth conversion through a direct transfer, the custodian will move mutual fund shares (or other property) from the traditional IRA to a Roth IRA. If you are doing the conversion through a 60-day rollover, you must roll over the same property that was distributed to you.
Question:
I am age 74 and have inherited both an IRA and a Roth IRA after my older sister died. Can I do a rollover from the inherited IRA into the inherited Roth IRA?
Daniel
Answer:
Hi Daniel,
Unfortunately, not. Inherited IRA funds cannot be rolled over (converted) to inherited Roth IRAs. By contrast, inherited employer retirement plan funds can be converted to inherited Roth IRAs.
If you have technical questions you would like to have answered, be sure to submit them to mailbag@irahelp.com, to be answered on an upcoming Slott Report Mailbag, published every Thursday.