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How to Move from IRA to Roth?

#1
My IRA has 35 positions as of today.  I need to begin moving this year, turn 64 in 7 months.  I plan to pay for the transfer with current Saved dollars and with holdings at old tax rates.  30 of those positions are gainers with a range of 5% to 440%.  5 are currently in the red, range 1% to 29%(old IAU).  I also have assorted Treasuries and a CD ladder, nothing more than 6 months out.

Does it matter what order I move these assets from IRA to Roth?

Example: I have an Emerging Market ETF that I have some loss, move it first or last?

The stock with the highest gain is TTWO.

Same question, move it early or late?

I guess my question boils down to: Do gains/losses matter when moving from IRA to Roth?

I'm hoping someone here has experience in the process.    I do not.


Thanks in advance.
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#2
I have been moving stocks, REITs, CEFs, BDCs,cash and other things from my IRA to my ROTH for about 5 years with no particular problem.  On the website there is a place to transfer all or partial holdings ( cash or other ) and it has let me do it myself however I vaguely remember having to talk to Fidelity the first time I did it.
You have alot more experience investing than I do but I don't see any particular reason why you would have to do your conversion in any particular order.
Since my holdings are probably quite a bit smaller than yours  and you have only about 6 years before you turn 70 1/2 you will have to probably pay something in additional taxes.  In my situation I'm in the lowest tax bracket so when I convert ( and wife ) we don't incur any additional taxes on the conversion (which we have our CPA do "what if " calculations ) nor push us into a higher bracket.
The big reason we like the ROTH is all earnings are tax free, plus they don't mess up our Medicare premium which some have mentioned is an issue.  The securities in the ROTH act the same way as in our IRA so that isn't an issue for us.
Since both IRAs and ROTH are retirement accounts I don't believe that there is any benefit or harm by converting any holding in whatever order suits you.  There isn't any tax advantage I know of HOWEVER I AM NOT A ACCOUNTANT OR TAX EXPERT.  PLEASE TALK TO A QUALIFIED PERSON BEFORE  DOING ANYTHING I SAY!!!!
Hope this helps
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#3
Generally, it doesn't matter. If you make in-kind conversions, it is treated tax-wise the same as withdrawal of funds at market value on the date of initiation of the transfer.
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#4
I have been moving assets in-kind for about five years now.  I process through a call to Fidelity.
 
My strategy is pretty simple- move equity growth to the Roth, leaving REITs, ETFs, mutual funds and corporate bonds in the T-IRA.   I move equities that I feel have the best forward growth prospects.  That could be a stock that has taken a dip, or one that is making new highs with further runway.  I've learned from two mistakes. 
 
First, be very thoughtful in transferring anything speculative.   For example, I bought an IPO through Fido in my T-IRA.  It promptly ran up 26% before I transferred it to my Roth.  Once in the Roth, it promptly ran down back to the IPO price.  Unfortunately, I ended up paying a lot of taxes on the transfer.
 
Second, consider the timing of the transfer.  I used to always make transfers in January to maximize the time held in the Roth and to take advantage of outperformance which often occurs early in the year.  That was a big mistake in 2018.  I moved assets in early Jan and the market tanked in February.  Everything has recovered just fine, but if I could have transferred some assets in February I would have saved some in taxes.  So now I transfer half in Jan and wait for a dip on the other half.  If we don't get a dip, I expect to be in during the summer doldrums.
 
There is a lot of debate on filling out tax brackets and making conversion contributions that keep you in 12-15% bracket.  It's something to consider but also weigh against your overall goals and how long it will take you to exit the T-IRA under such a strategy.  My goal is to have all assets equally in three  buckets.  My taxable account is almost there, but my T-IRA is overweight from previous workplace savings and I'll probably continue making conversion contributions until I draw ss.  My assumptions include rising effective rates and the belief that Congress will not roll back the benefit of the Roth to my cohort.
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#5
Thanks, very useful replies.
I'm thinking to move the downtrodden BABA and MCHI
Based on these being long term holds for me and better potential growth over time.

I attended a Fido seminar in 2008 and watched one investor move $1million in assets that year.
He insisted on doing it and paying the full tax load that year.
I'm sure he made out like a proverbial bandit although 2009 must have made him nervous.
I don't think we'll quite get that opportunity again.
Actually, I hope not.
 
And OT, I just made the Costco run.
Chicken and Turkey

Rocketman -
Don't be so sure about larger or smaller amounts of $$.
With Cali real estate being what it is, you could likely  buy and sell multiple properties here
At least for now.  Big Grin Big Grin
 
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#6
Re: Initiating Roth conversions via the web:

Assuming that you have both your T-IRA and Roth IRA at Fidelity, if you are being told you cannot do the Roth conversion via the web site, you are probably clicking on <transfer> .  That is the wrong thing do to.  Instead,  go to <Portfolio View; select your Roth IRA and click on the "I want to... " <Convert an IRA to this Roth IRA>

That will take you to a page where you can identify the IRA from which you want to pull the assets. From there, you will get a lists of your holdings in the account  from which you can select the shares you want to include in each partial Roth conversion that you perform.  There is also a place where you would select that you don't want income taxes withheld during the conversion.  To avoid an under-withholding penalty, you want to be sure that your quarterly Federal and State estimated tax payments are at least 100% or 110% of last year's total tax liability.

 

Personally, I don't think gains or losses in the T-IRA really matter.  IMHO, it is not about how much they have grown or lost in the past, it might be about how much or how quickly they may go up in the future.  Who knows that?  The idea being to capture as much future growth while in the Roth.

 

I would assume that Treasuries can go just like equities but I am not sure about CDs.  I have never held either of them at Fidelity. 

Remember, as of 2018, Roth conversions can no longer be re-characterized or reversed.  Once you the conversion, you are stuck with it.
Annual Roth contributions are still allowed to be re-characterized or reversed.
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#7
Great perspective and much appreciated.
Within the background of the past 10 years, it's easy to be over confident.
That is highly and bigley encouraged in the current context.
Everyone pretends.
I think future growth will not be what is being dictated.
Again, thanks for your contribution.
It might or might not happen soon but I will post it up.
That's important to me.
 
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#8
I still can't convert online using your method because as soon as I click on partial conversion there is a message in red letters saying it can't be done online.
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#9
(12-21-2018, 09:00 PM)MrRichLife Wrote: I still can't convert online using your method because as soon as I click on partial conversion there is a message in red letters saying it can't be done online.

It has been working for me for a number of years.  My holdings have all been MFs, and ETFs although I believe it would work with stocks the same way.  
What assets you have inside your Traditional IRA?
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#10
I had MFs, ETFs, individual stocks, taxable munis and CDs in the rollover IRA, much of which is already converted to the Roth. I did the conversions by mail.
 
Just 3 more annual conversions to go and I've already printed the forms off the pdf after filling in the blanks online. At this point it's mostly fixed income, so market fluctuations are not much of a factor. I always convert in-kind and view the 2 accounts as one merged account for investment purposes. This is aided by my creation of a merged list on the fixed income analysis screen. I had a lot of work to do on the fixed income side because there was a bond fund in the original 401k that did not transfer to the rollover in-kind and I didn't want a bond fund. Over the years, I converted a couple other accounts also.
 
I sped up the equity conversions by selling in the rollover and buying the same position in the Roth using the proceeds of a fixed income maturity. I then bought the fixed income replacement in the rollover using the proceeds of the equity sale.
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