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Greetings, Jas, and welcome. You wrote:

<<My understanding from Pub. 590 is as follows:

1. I can withdraw a portion of the assets in a traditional IRA and reinvest them (within 60 days)
in a Roth IRA. I will roll the entire withdrawal into the Roth IRA. I see this as the most beneficial method of establishing a Roth IRA, if I am correct in my assumptions.>>

Okay, so far so good.

<<2. Or, I can establish a seperate traditional IRA (IRA 2) with a portion of the funds from the conduit IRA (IRA 1) via a rollover and have the traditional IRA (IRA 2) converted to a Roth.>>

Yes, you can. I'm not sure why you would want to to this as it's totally unnecessary, but you can do so. To me, it's easier to just have the partial withdrawal from the conduit IRA transferred directly to the Roth IRA. Why use an intermediate step when it's not required?

<<3. The first of these actions will not be affected by the one year waiting period for additional rollovers. The second of these actions will be affected by the one year waiting period.>>

If you do a direct rollover of the money from the traditional IRA, that's correct. Rollovers (a situation wherein you receive the withdrawal and deposit the funds in another IRA within 60 days) are limited to once every twelve months. Direct transfers (wherein the money flows directly from one custodian to another) may be done as often as you want. Of the two methods, I prefer the direct transfer.

<<4. I will include this withdrawal in my gross income for the current tax year.

5. Any additional transfers from the conduit IRA to the Roth IRA will be carried out as in step 1.

I talked to my broker about the above, and the customer rep. really wasn't sure. Anyhow, this is my current understanding of the process. If you have any input, it would be greatly appreciated.>>

You're using a direct transfer to get your retirement plan money to the conduit IRA. Just do the same to get the conduit IRA money to the Roth. All brokers/fund custodians know how to do this. All that's required is for you to complete a form or two. Use the direct transfer, and you can transfer part or all of your conduit money at will without having to worry about rollover restrictions or anything else. Your outline seems to add unnecessary steps to me.

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