Converting Traditional IRA Funds to Roth IRA

[gk10002000]

Etrade is my principal brokerage and I have Regular Brokerage, Traditional IRA and Roth accounts there.  As I prepare for exiting the workforce, I just walked through the Etrade Convert Traditional IRA to Roth IRA process. Gosh, they make it easy.  You select the accounts and the amount of cash or security you want to convert.  They give you the option of the mandatory 10% Federal withholding or you can select any % you want.  That is a great feature because I will have some other incomes that are taxable and I don't want to have to mess with quarterly tax payment stuff.  This way I can make sure I withhold enough.  They don't have anyway to do a State withholding tax, so you will have to handle that State by State unless you be in a tax free state.  I am.

[skatewash]

Yes, conversion from traditional to Roth IRA is an easy (online) process.  For some reason recharacterization (the process to undo part or all of a conversion) is not as straightforward.  Of course, you may never want (or need) to do a recharacterization, but I find that with my brokerage that I must submit a request by mail to do so (not available online).  I'm not sure if that is a legal IRS requirement or a decision made by my brokerage.  It's the only thing I do with my brokerage that must be done by mail, everything else I can do online.

I think the 10% withholding might be the default, but as you point out it can be changed to suit your circumstances.  No withholding works best for my situation.

Edited May 21, 2017 by skatewash