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Subject:  Re: Does Roth Conv. count toward 1 yr. rule? Date:  9/18/1998  5:26 PM
Author:  TMFPixy Number:  5503 of 100116

Greetings, PatrickDW, and welcome. You asked:

1) I have two IRAs that I converted to Roths earlier this year, leaving each of them in the same mutual funds. Now I want to start investing Foolishly and roll them over to a self-directed Roth IRA in a brokerage acct. The IRS says you can only do a rollover once per year.
a) Does the Roth conversion I already did count against me as a rollover?
b) Is the waiting period 12 months or is it once per calendar year?

It depends on how you accomplished the conversion. If you received a check made out in your name to close the traditional IRA and if you then deposited that check in a Roth IRA, you had a rollover. You can have only one rollover in any consequtive 12-month period. OTOH, if you had the old IRA directly transfer the money from that IRA to the new Roth IRA, then you had a direct transfer. You may accomplish a direct transfer from custodian-to-custodian as often as you want -- daily if you could get the custodians to go along with it. So even if you had a rollover in the original transaction, you still don't have to wait 12 months to move it to a self-directed Roth IRA. Just arrange to have the present custodian directly transfer the funds to the new Roth IRA you establish with the broker of your choice. In fact, if you tell the broker that's what you want to do, that agency will send you the appropriate forms to complete to get it done.

2) My wife moved the money from a former employer's 401(k) to an IRA, then converted to a Roth (the mutual fund company told her to do it this way). Does she have to wait a year before rolling into a self-directed Roth IRA?

See the above. If she rolled the IRA to the Roth IRA, she can still do a direct transfer to another Roth IRA without waiting 12 months.


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