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Jul 9 / admin

How Can an Individual Convert a Traditional IRA to Roth IRA?

Traditional IRA is a retirement plan in which you are allowed to save the money for retirement. It may also offer tax shelter for the contributions which are made by you to account.

Roth IRA is a new type of IRA and is retirement account in which a account holder can contribute money after tax income up to a specified amount each year. Tax free withdrawals may be allowed after age 59, earnings on the account are tax free.

A traditional IRA may be converted to a Roth IRA by:

Rollover- A distribution can be contributed from a traditional IRA to a Roth IRA within 60 days after distribution.

Trustee-to-trustee transfer- The financial institutions which hold the traditional IRA assets offer directions to transfer traditional assets to Roth IRA with another financial institution.

Same trustee transfer- It is like trustee-to-trustee transfer, the financial institutions which hold the traditional IRAs offer the directions to transfer traditional assets to Roth IRA, but in this, things will be simpler as transfer happens within the same financial institutions.