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[[Hi Fools, I have decided to go ahead and convert the money purchase plan distribution from my
previous employer to a Roth....]]

Congrats, Bryan.

[[but (isn't there always at least one of them?) before I convert this
Ira to a Roth I would like to reconvert a previously converted Ira to obtain a lower tax bite (since it
has lost about 15% of value since the conversion)]]

OK. So far, so good.

[[ Both Ira's are at Waterhouse and would it be
advisable when reconverting to just roll it to the money purchase plan ira monies? I understand the
penalties about co-mingling the monies but that is no big deal to this Fool. The advantages of this is
that all of the money is in one account and then can be converted to the Roth. I don't see any
disadvantages with this plan but thought I would check everyone's opinion here at the Fool.]]

Well, if it were me, I believe that I would open a new account with which to "unconvert", simply to make the bookkeeping a bit easier, and also to show the IRS, should they ask, how the "unconversion" actually worked. There is some hazy language (at least in my opinion) that seems to imply that the IRS would like to see the "unconverted" funds in a separate account, but there is nothing specific about that issue. For me, I would be safe now rather than sorry later on. But, as far as I know, there is not "official" rules which would require such a separate account.

[[Also
am I correct in my assumption that whatever the value of the account is on the day of the
conversion that I just substract the nondeductible portion of the money to obtain my basis for tax
purposes? ]]

Assuming that ALL of your IRA funds are converted, the answer would be "yes...you are correct in your assumption". But if only a part of your IRA funds (such as only one out of three IRA accounts is converted), then you must spread your basis over the conversion.

[[Can you convert all holdings in the Ira or must you first liquidate to all cash before
converting to a Roth?]]

There are certainly no IRS rules regarding the conversion of cash only. Many brokerage firms are converting securities, as I understand it. So check with your broker and see what their policy might be.

TMF Taxes
Roy

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