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In December Youngest moved his 401K to a Roth and Traditional IRA. This had to be done via check in the name of the institution FBO Youngest Roth/Conventional IRA, per rules of the 401K administrator. No direct transfer, unless having the checks titled that way is considered a direct transfer.

Having checks titled to the new trustee is still considered a trustee to trustee transfer, since the owner of the accounts never actually has possession of the money - having a check that's made out to someone else (in this case, UBS FBO Youngest) is not possessing the money. Here is the explanation directly from the IRS in Pub 590-A:

A transfer of funds in your traditional IRA from one trustee directly to another, either at your request or at the trustee's request, isn’t a rollover. This includes the situation where the current trustee issues a check to the new trustee but gives it to you to deposit. Because there is no distribution to you, the transfer is tax free. Because it isn’t a rollover, it isn’t affected by the 1-year waiting period required between rollovers. This waiting period is discussed later under Rollover From One IRA Into Another.

He will be doing a Roth conversion of the TIRA and then moving the account to Vanguard. Because UBS charges a $95 transfer fee, I am looking at putting the remaining Roth into cash and having them send a check titled the same way as they received it, Vanguard Roth FBO Youngest.

What is the $95 transfer fee for? For moving the securities, or for transferring the account? When I look at UBS's explanation of fees: https://www.ubs.com/content/dam/static/wmamericas/understand... they do call out a $95 "Account Transfer Fee" with no explanation. But moving cash to another brokerage is still transferring the account, so my guess is he'll still be charged the $95 fee. There may be an extra ACATS (Automated Customer Account Transfer Service) fee if securities are transferred, but it's not listed in their list of fees. He could ask Vanguard if they will reimburse the fees.

Would we have to wait until 2019 to do that, since it would be two transfers by check in one year?

Again, it would still be considered a trustee to trustee transfer, since again, the owner never actually takes possession of the money, just the check that was made out to Vanguard. That said, if these transfers had been considered rollovers, you would have to wait a full 365/366 days, not just until 2019, assuming that by In December at the beginning of your post you meant December 2018, not December 2017.

Heck, it might take that long to do the conversion anyway, and UBS may not make the fee distinction between sending over mutual funds and sending a check, but it's nice to know what the Feds will let us do and when.

You will have no problems with the Feds, since these are trustee to trustee transfers, but as already mentioned, I suspect that he will be charged the transfer fee anyway.

Okay, stupid question time - Apparently, since he's only doing this with the Traditional IRA, he had the Roth 401(k) account transferred directly to Vanguard. Couldn't Youngest have opened a traditional IRA at Vanguard and have both of the rollovers sent there, if he was planning on doing the conversion anyway?

AJ
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