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Subject:  Re: Newby Q. How to convert IRA to Roth Date:  12/24/1999  12:27 AM
Author:  puff99 Number:  16831 of 88498

The usual good reason for doing 'direct transfer' of IRA funds rather than receiving the funds and delivering them to the new place within 60 days is because in the latter case the firm paying the monies to you is required to withhold taxes. In the direct-transfer method the witholding of taxes is not required. The method suggested by the Ameritrade person should work fine. Provided the funds are already in a traditional IRA I don't believe that it should be necessary for the intermediate step that Ameritrade requires of them setting it up first as a traditional IRA and then later doing the roth conversion. But I do see lots of advantages to doing it the way they suggest. #1 is that if you find later that you want or need to do a 'Recharacterization' that the funds stay at Ameritrade which is what you probably would want. #2 is that the conversion is between your accounts at the single firm and things are less likely to go wrong. And if they do go wrong then you only have to deal with the one firm and not both. puff99
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