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Just curious...why do you sell, transfer (convert) the cash created by the sell and then repurchase in the Roth? Why not just transfer, in-kind, the required number of shares that will equal the $$ conversion amount, to your Roth? The IRA custodian will calculate the dollar value of the transfer and this amount will go in box 1 and 2a of the form 1099-R you'll receive early the next year, assuming no other withdrawals or conversions that year. And I agree that transferring shares early in the year that pay qualified dividends would be a good choice. But by transferring shares, the asset allocation balance does not change. The only change is where the shares are located.

BruceM


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I usually use a mixture of in-kind transfers and re-balancing.

I do my planning and analysis in dollar terms only. Then I arrive at a separate decision of what to sell to achieve that dollar amount. What I sell in the TIRA and what I buy in the Roth are not always identical, some is, some isn't.

For example, when I decided I wanted to exit Vanguards Total International Fund, I sold all shares in the TIRA, and bought S&P500 Index in the Roth.

For a long while, I was paring down Wellington in my TIRA because of the lack of favorable treatment of Cap Gains and Divs in the TIRA. For a few years, I was buying back the same number of Wellington shares in the Roth, but in the finl conversion I bought some Dividend Appreciation Index Fund instead.

Now that the Wellington has been eliminated in my TIRA, I have been sourcing my conversion from the S&P Index. For a while, this was going into the Dividend Appreciation Index Fund in the Roth but when that balance built high enough to suit me, I switched and started buying the S&P Index in the Roth. My next conversion (in 2022) should allow me to eliminate the 500 Index in my TIRA, then I will start converting the Federal MM fund. I saved it for last since the income is so low, the unfavorable tax treatment hurts less than with the other stock funds.

As you can see mine is a two step process, determine a dollar based conversion target, then assess what I want to lighten up in the TIRA and what I am trying to build up in the Roth. So instead of straight in-kind transfers, there is a bit of re-balancing going on embedded in the conversion.
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