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Financial Planning / Tax Strategies


Subject:  Re: Trad to Roth Conversions and Recharacterizat Date:  3/15/2013  10:38 AM
Author:  TMFPMarti Number:  118060 of 124284

>>Let's say you're going to invest in five stocks. You buy them in the traditional IRA then convert into five Roth accounts, one for each stock. Come 10/1/2013 you see that three are winners and two are big losers. You can recharacterize only the losers, thus eliminating the "phantom" income from only those conversions. If everything's in one account you can't isolate just the loss for recharacterization.<<

I have a few questions about how this works, please.

1a. Do each of the stocks have to be bought in the traditional IRA first? (no transferring cash to the various Roth accounts and then buying the stock from within the Roth account?)

Yes, you must buy in the traditional then convert just that holding into its own Roth account.

b. If, after you've moved the stock to the Roth IRA, you sell that stock and replace it with another,