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Transferring a Traditional IRA

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  • Transferring a Traditional IRA

    Hey all,

    My wife has a traditional IRA account that her former employer transferred the funds into (job she left 5 years ago). Can she move it to a new traditional IRA brokerage account? Can those funds be transferred to my own Roth IRA? Can those funds be converted to a spousal Roth IRA?

    Thanks in advance

  • #2
    Welcome to the forum!
    1. Yes, she can open a TIRA at another brokerage and transfer
    2. No, she cannot transfer it to your Roth IRA
    3. Yes, she can open a Roth IRA and convert the TIRA to a Roth. (A “spousal IRA” is an IRA that receives contributions from a non working spouse based on a working spouse’s earned income.)
    Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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    • #3
      Originally posted by jfoxcpacfp View Post
      [*]Yes, she can open a Roth IRA and convert the TIRA to a Roth.[/LIST]
      Just remember she’ll owe taxes on the conversion. That’s not a reason in itself do not do the conversion, but you do want to know what the tax bill will be before you do it.

      if your wife is currently working and her employer offers a 401(k), another option might be to roll the TIRA into her current 401(k), if her current employer’s plan allows it.

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      • #4
        Originally posted by artemis View Post

        Just remember she’ll owe taxes on the conversion. That’s not a reason in itself do not do the conversion, but you do want to know what the tax bill will be before you do it.

        if your wife is currently working and her employer offers a 401(k), another option might be to roll the TIRA into her current 401(k), if her current employer’s plan allows it.
        Nice follow up.
        Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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        • #5
          The tax burden of converting my wife's traditional IRA to a Roth IRA would be 12%. Is this the same as a spousal roth IRA or her having her own roth IRA? Would it be better for her to just keep her traditional IRA then? She plans on working part time. Of note, we file married filing jointly. I am 1.5 years out from becoming an attending where I'll be making over the maximum income threshold so don't know what I should do now in terms of her current TIRA and my roth IRA accounts.

          Thanks in advance

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          • #6
            In the 12% bracket, it’s a no brainer to convert her tIRA to Roth. “Spousal” simply denotes who made the contribution; IRA ownership is individual as the name implies regardless of whether the individual or spouse made the contribution. Both of you should contribute to your Roth IRAs and familiarize yourself with doing the BDR since you’ll exceed the income limit once you become an attending.
            https://www.whitecoatinvestor.com/ba...-ira-tutorial/

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            • #7
              Originally posted by GasFIRE View Post
              In the 12% bracket, it’s a no brainer to convert her tIRA to Roth. “Spousal” simply denotes who made the contribution; IRA ownership is individual as the name implies regardless of whether the individual or spouse made the contribution. Both of you should contribute to your Roth IRAs and familiarize yourself with doing the BDR since you’ll exceed the income limit once you become an attending.
              https://www.whitecoatinvestor.com/ba...-ira-tutorial/
              So both spousal roth IRA and my roth IRA would be eligible for BDR once I am an attending? She will make little to no money at that time.

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              • #8
                Originally posted by dna867 View Post

                So both spousal roth IRA and my roth IRA would be eligible for BDR once I am an attending? She will make little to no money at that time.
                Yes

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                • #9
                  For MFJ as long as there are enough earnings you can contribute to both. As an attending this will certainly be true. Even as a resident you should have enough earnings if you have room in your budget to save $6K X2.

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                  • #10
                    Originally posted by dna867 View Post
                    So both spousal roth IRA and my roth IRA would be eligible for BDR once I am an attending? She will make little to no money at that time.
                    It might seem like semantics, but there is really no such thing as a 'spousal' IRA account. There are only traditional IRA accounts and Roth IRA accounts. What there are, are spousal IRA contributions to either based on the other spouse's net IRA compensation.

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                    • #11
                      Thank you all for the replies. Much appreciated

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