Roth Conversion Steps

Roth conversions allow you to pay taxes now instead of having to pay them later. This is often a wise choice, especially if you think your personal tax rate or tax rates in general will increase in the future. A Roth conversion is simply the process of taking funds from a Traditional or tax-deferred IRA and moving them to a Roth IRA.

Before, performing a conversion you should speak with your advisor and or tax professionals, because it is a taxable event and isn’t right for everyone. Though conversions are easier than ever to implement, if you are a client of Tines Capital, we highly recommend you let us walk you through the process and give our recommendation. Below is a guide of how Roth conversions are performed at Interactive Brokers.

1. GO TO IRA CONVERSION

Login to IBKR.com and navigate to the account settings section of your non-Roth IRA, by clicking on the icon of a person on the upper right followed by “account settings.” Make sure you have selected your non-Roth IRA. This can be a Traditional IRA, Rollover IRA, or SEP IRA. Then go to IRA Conversion setting by clicking the corresponding gear icon.



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2. FOLLOW THE STEPS

From here you will follow the prompts to verify that it is you and declare how much you want to convert from a Traditional IRA to a Roth IRA. After you do this the Traditional IRA will remain open as long as you maintain a funded Roth IRA.

3. Should You withhold taxes

By not withholding taxes you will increase the amount of money you can move into a Roth IRA. Therefore, it is usually best to not withhold taxes and instead pay the tax bill caused by the conversion using income or funds in a checking, savings, taxable investment account, or some other source.