Is there a fee to convert a reg Ira to a Roth IRA. Also was there a fee when Roths first came out?

Answer 1

There's no fee, but you do have to pay taxes on the amount you convert (no penalty, just income tax). When Roth IRAs first came out, the IRS allowed you to spread the income (and therefore the tax) over four years; I don't believe that provision still exists.

Answer 2

As others have said, there is no fee or penanlty, but you do have to pay the income taxes. You do have to be very careful, however. It's best to do the conversion in the same company that you have the traditional IRA. If you take a distribution first or go to a different company for the new Roth IRA, your current IRA company might withhold not only the income taxes, but also the 10% penalty cause they have to assume that you're gonna just spend it. Then if you don't sign up for a new Roth IRA account within a specified amount of time (90 days I think), then you will have to end up paying the 10% penalty. If you do transfer it successfully within 90 days, then you will eventually get the 10% penalty back the next year you file your taxes.

Answer 3

You would owe the tax on the 5,000. But you wouldn't get hit with the extra penalty. The tax won't be charged until you do your taxes next year. However, they will withhold 20% of it right now. So you can count on only 4,000 going into the ROTH. No cash outlay on your end. I wouldn't go to a bank. I'd go online to Vanguard, Fidelity, or one of those and open an IRA with them. Then put the money in a S&P 500 fund. If nothing else the earnings will be higher than with your bank. There will be a small annual charge with these places...About $10. But they don't bill you, they simply liquidate some shares from your account. There is no loads or extra fees for starting an account of this type.

Answer 4

The government doesn't charge a fee, and never has. Some investment firms might.

If you convert a traditional deductible IRA to a Roth, you'll have to pay income tax on the amount you convert. There won't be any penalty charged, though.

Answer 5

As others have said, the IRS does not have a fee, but you will have to pay taxes on the amount converted.

dilchien misunderstands withholding on IRA withdraws and rollovers. If you transfer money directly from on IRA to another, they don't withhold anything unless you ask. You don't want them to because anything that is not placed in the new IRA is considered an early withdraw and subject to the 10% penalty. If you take possession of the funds to place in a new IRA, they withhold 20% regardless of the amount of tax you will owe.

Answer 6

It depends on who does it for you.

You will have to pay taxes on all of money you put in them pre-taxed. The first year they came out you were allowed to prorate those taxes over 4 yrs.

If you've been consistent about contributing yearly and you're 40 yrs. old or less, it's still worth it. Find a way to get the tax $. Over 40 yrs. old and factors such as: Age you plan to retire, Past, Present, and estimated Future Tax Bracket and Income. etc.

Since you even asked the Q. I'll assume you've been Wise and responsible enough to do some retirement investing and tax sheltering. If this the case, then find an Investment Counselor or Broker and nave him run you #'s. If you don't know one that you trust or have a friend that you trust who has one he trusts, then pick one and tell him you're willing to pay a fee, but that it for a 2nd opinion and that someone else is doing the brokering. That way he has no reason to lie in order to get your acct.