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#26
LondonRoad
04-21-2007, 7:06 PM | Post #2377204
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Never "Cash Out"! Which is very much different than "converting".
Oh God, please, someone help me here.
You need an IRA custodian, like a brokerage house or online trading account or something? Do you have one? If yes, (hope it is not with the local savings and loan or local bank because then you will need to get it out of their hands if you wish to do something other than money market or CD's. Do you realize what you've lost in gains simply by having your cash "sit there"?). Another subject(s).
Then you instruct your custodian to open up a Roth account for you as you wish to "convert" some of your IRA rollover money to a Roth. Then you tell them how much you wish to convert. $4,000 from one account goes into the Roth account dollar for dollar.
At year's end you will get somekind of 1099 from them saying you converted $4,000. This is what you report on your tax form as a conversion. Not penalty and you simply pay your ordinary income taxes on the conversion and if you simply convert little by little it doesn't bump you up in tax brackets.
Who is holding onto the IRA Rollover money?
Originally posted in thread: 10110
Topics
brokerage
IRA rollover
IRAs
online trading
Roth
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