Monday, April 6, 2020

IRA to Roth Conversion Part #3

Retirement Gremlin back to talk about the long term process I am undertaking to slowly convert my IRA holdings to Roth.  This is the third 'backdoor' account conversion I have initiated.  I decided to take advantage of the economy, our down income (wife taking school year off for the 2nd child), and our general tax situation.  My first conversion and the underlying strategy can be found here.

Strategy: to avoid unnecessary taxable events, I will move around 1 to 2 "positions" a year.  At this rate I will be able to move the whole IRA to my Roth by the time I am 59. This is of course to maximize growth and minimize taxes.

Process: Since my accounts are all at the same brokerage, I can for no fee transfer single positions after a few mouse clicks.

Part 3:

For my third conversion I moved my entire position in WELL (30 shares - $1218 value). With this conversion, I am effectively moving $104.40 in forward dividends from my SEP IRA to my ROTH accounts.  The initial cost on the shares was a little over $2100 and their recent high was $3000 in value; so I feel like long term this was a good move.  The income in a Roth is always more powerful than a regular IRA.

Part 4 will happen next calendar year.

All changes will be reflected in my portfolio at the end of the month.

- Gremlin
- Long WELL

No comments:

Post a Comment