Seems like Roth conversions are harder with the brokerage accounts

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tadamsmar
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Seems like Roth conversions are harder with the brokerage accounts

Post by tadamsmar »

I went in to do some Roth conversions and it seemed harder this year. I guess it is due to converting to brokerage accounts.

Previously I just specified a dollar about and the fund it was coming from and going to.

This time it took me into an interface where I had to use share amounts and I has to send the money to a settlement fund in the Roth account. I will have to go back later and covert the money in the settlement account into shares in a mutual fund.

Is this the new normal, or did I miss an easier way to do it?
Silk McCue
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Re: Seems like Roth conversions are harder with the brokerage accounts

Post by Silk McCue »

You can do an Exchange (Sell to Buy) from your IRA to convert directly to the Roth. A couple of steps in it will ask if you are doing a Roth Conversion and take you to another screen to complete.

Update to add: This is how it works at Vanguard. I believe that is what you are referring to since you mentioned converting to the brokerage account since last year.

Cheers
Last edited by Silk McCue on Sun Dec 05, 2021 1:20 pm, edited 1 time in total.
twh
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Re: Seems like Roth conversions are harder with the brokerage accounts

Post by twh »

Not sure what brokerage you are using, but what it sounds like you want to do is an in-kind conversion. That's where you have X shares of ABC in an IRA and want to convert that into a Roth. It sounds like the interface you are describing wants you to only convert cash. If it is any of the major broerages, you can do in-kind conversions easily. Of course, you'll need to pay the taxes out of separate money.
Gd_Enf_56
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Re: Seems like Roth conversions are harder with the brokerage accounts

Post by Gd_Enf_56 »

I plan on doing a Roth conversion in mid-Dec in my Vanguard account.

Here is the link for a Vanguard Roth Conversion: https://support.vanguard.com/tutorials/roth-conversion
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tadamsmar
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Re: Seems like Roth conversions are harder with the brokerage accounts

Post by tadamsmar »

bhluckyusaguy wrote: Sun Dec 05, 2021 1:23 pm I plan on doing a Roth conversion in mid-Dec in my Vanguard account.

Here is the link for a Vanguard Roth Conversion: https://support.vanguard.com/tutorials/roth-conversion
In the tutorial example, the person converts from their settlement account of their traditional ira. Do you have money in your settlement account of your traditional IRA?

If you don't have any money in the settlement account, then the specific example will not work.

I don't have money in my IRAs that are not invested. In that case, it seems to now be a 2-step process.
Last edited by tadamsmar on Sun Dec 05, 2021 2:14 pm, edited 1 time in total.
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Leif
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Re: Seems like Roth conversions are harder with the brokerage accounts

Post by Leif »

tadamsmar wrote: Sun Dec 05, 2021 12:52 pm Is this the new normal, or did I miss an easier way to do it?
I use Fidelity. It works the way you describe - via shares for a Roth conversion.

I wish there was an option at Fidelity to enter a dollar amount for the conversion.

However, Fidelity does allow you to enter the transfer after the market close. So I wait for the market close + 2 hours to get the current day pricing. Then I divide the amount to be converted by the day's close pricing, giving me shares to convert. The transfer is immediate. I don't understand why a $ amount cannot be entered and Fidelity calculates the shares and does the transfer once it knows the closing price for the day.

They offer that for selling using tax lots. You sell using an $ amount and the ordering of your tax lots. It gives you a estimate of the shares from each tax lot. After the market close it sells the exact dollar amount you entered using the tax lot order you provided.
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tadamsmar
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Re: Seems like Roth conversions are harder with the brokerage accounts

Post by tadamsmar »

Earlier I did a transaction where I sold mutual fund shares in the Trad and directed them to the settlement account of the Roth.


But I have not gotten any confirmation of the transaction, no "in progress" indicator.

I think the transaction will occur after business close on Monday. I am going to wait till then to see what happens. I can indirectly tell that there is a transaction because if I go to do another conversion it tells me that the option to covert the entire trad account is not available due to something in progress.

Last year I could just move money in dollars from a Trad fund to any Roth fund that I chose, and I was done.
livesoft
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Re: Seems like Roth conversions are harder with the brokerage accounts

Post by livesoft »

Please read this currently active thread about this at Vanguard. It seems that different people see different things:
viewtopic.php?f=1&t=363881

And a thread from a year ago:
viewtopic.php?t=334519
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Gd_Enf_56
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Re: Seems like Roth conversions are harder with the brokerage accounts

Post by Gd_Enf_56 »

tadamsmar wrote: Sun Dec 05, 2021 1:51 pm
bhluckyusaguy wrote: Sun Dec 05, 2021 1:23 pm I plan on doing a Roth conversion in mid-Dec in my Vanguard account.

Here is the link for a Vanguard Roth Conversion: https://support.vanguard.com/tutorials/roth-conversion
In the tutorial example, the person converts from their settlement account of their traditional ira. Do you have money in your settlement account of your traditional IRA?

If you don't have any money in the settlement account, then the specific example will not work.

I don't have money in my IRAs that are not invested. In that case, it seems to now be a 2-step process.
I do not have money in a settlement account in my IRA.

I just did a trial run and there is the option to input the number shares (all or partial) I want to sell for the mutual fund I want to convert to the Roth. There is also a price listed for the fund so I can calculate the estimated amount of the conversion. For example, if the price is $100 and I want to convert $75,000, then I input 750 shares.

If you have money in a settlement account it will appear as well as the mutual funds. If converting from the settlement account, you will need to input the dollars you want to convert since each share is $1.

The few times I have done a Roth conversion I did not have to sell shares to put money in a settlement fund for a subsequent conversion.
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tadamsmar
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Re: Seems like Roth conversions are harder with the brokerage accounts

Post by tadamsmar »

bhluckyusaguy wrote: Sun Dec 05, 2021 2:34 pm
tadamsmar wrote: Sun Dec 05, 2021 1:51 pm
bhluckyusaguy wrote: Sun Dec 05, 2021 1:23 pm I plan on doing a Roth conversion in mid-Dec in my Vanguard account.

Here is the link for a Vanguard Roth Conversion: https://support.vanguard.com/tutorials/roth-conversion
In the tutorial example, the person converts from their settlement account of their traditional ira. Do you have money in your settlement account of your traditional IRA?

If you don't have any money in the settlement account, then the specific example will not work.

I don't have money in my IRAs that are not invested. In that case, it seems to now be a 2-step process.
I do not have money in a settlement account in my IRA.

I just did a trial run and there is the option to input the number shares (all or partial) I want to sell for the mutual fund I want to convert to the Roth. There is also a price listed for the fund so I can calculate the estimated amount of the conversion. For example, if the price is $100 and I want to convert $75,000, then I input 750 shares.

If you have money in a settlement account it will appear as well as the mutual funds. If converting from the settlement account, you will need to input the dollars you want to convert since each share is $1.

The few times I have done a Roth conversion I did not have to sell shares to put money in a settlement fund for a subsequent conversion.
I think I did what you said. Use a calculator to convert dollars to shares and then directed it to the Roth settlement account because that seemed to be the only option. But there was no indication the the transaction happened. No email, no text, no "in progress" indicator.

Well, there was a indirect indicator. I went back in to do another part of my planned Roth conversion from the same trad account and it did say that I could not convert the whole account because of ongoing activity.

I guess the transaction will occur after close on Monday? Not sure. Maybe I will get a text in the middle of the night.

I decided to not do the rest of my conversion this way. I went back in an sold some shares so that I will have money in my trad ira settlement account. When that money comes available then I will complete the process in a way that hopefully comes with more immediate automatic documentation.

I had planned out a 3 step Roth conversion and rebalance that will keep my AGI below the Medicare Part B threshold for higher premiums. But it's taking more steps! Funny how the new interface is less automated than the old one.
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Re: Seems like Roth conversions are harder with the brokerage accounts

Post by livesoft »

This thread highlights point #13 of my broker selection criteria:
13. You can always tell where your money is which means that pending transactions and orders are reported accurately and updated in real-time. Also money that is "available to trade" is reported accurately and in real-time.
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iceport
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Re: Seems like Roth conversions are harder with the brokerage accounts

Post by iceport »

tadamsmar wrote: Sun Dec 05, 2021 12:52 pm I went in to do some Roth conversions and it seemed harder this year. I guess it is due to converting to brokerage accounts.

Previously I just specified a dollar about and the fund it was coming from and going to.

This time it took me into an interface where I had to use share amounts and I has to send the money to a settlement fund in the Roth account. I will have to go back later and covert the money in the settlement account into shares in a mutual fund.

Is this the new normal, or did I miss an easier way to do it?
I'm in the same boat, tadamsmar. I plan to do another Roth conversion in January, and I was prompted by several questions on this forum to log into my Vanguard account and test the process. Unfortunately, my experience matches yours: I could only convert on a share basis directly from my mutual fund in the tIRA account. Like you, I don't recall lacking the ability to convert on a dollar basis when I last converted, in 2019. Both of my prior conversions were for exactly $40k, and that's what I had planned to convert this year also.

Fortunately, my entire tIRA is invested in a single fixed income fund. So I plan to liquidate $40k of it, and then the next day convert the $40k on a dollar basis to the Roth IRA.

Kind of a pain that I don't remember from prior years... :annoyed
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Re: Seems like Roth conversions are harder with the brokerage accounts

Post by Emilyjane »

My husband and I both have Vanguard traditional and IRA accounts. He has “old” mutual fund account, I switched to brokerage when urged to by vanguard. When we do Roth conversions, he can convert a dollar amount, I have to figure ou how many shares (I guess at about 2:30 pm central time).

I wish I’d known this, I wouldn’t have switched to brokerage account. But it does provide math practice for me.
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Re: Seems like Roth conversions are harder with the brokerage accounts

Post by retiredjg »

I am on the old mutual fund account platform, both IRA and Roth IRA. I did a conversion yesterday and was able to pick a nice round dollar amount. No shares, no math.

Brokerage platform still seems to have a lot of shortcomings, even after all this time. So disappointing.
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Re: Seems like Roth conversions are harder with the brokerage accounts

Post by RickyAZ »

iceport wrote: Sun Dec 05, 2021 3:23 pm
tadamsmar wrote: Sun Dec 05, 2021 12:52 pm I went in to do some Roth conversions and it seemed harder this year. I guess it is due to converting to brokerage accounts.

Previously I just specified a dollar about and the fund it was coming from and going to.

This time it took me into an interface where I had to use share amounts and I has to send the money to a settlement fund in the Roth account. I will have to go back later and covert the money in the settlement account into shares in a mutual fund.

Is this the new normal, or did I miss an easier way to do it?
I'm in the same boat, tadamsmar. I plan to do another Roth conversion in January, and I was prompted by several questions on this forum to log into my Vanguard account and test the process. Unfortunately, my experience matches yours: I could only convert on a share basis directly from my mutual fund in the tIRA account. Like you, I don't recall lacking the ability to convert on a dollar basis when I last converted, in 2019. Both of my prior conversions were for exactly $40k, and that's what I had planned to convert this year also.

Fortunately, my entire tIRA is invested in a single fixed income fund. So I plan to liquidate $40k of it, and then the next day convert the $40k on a dollar basis to the Roth IRA.

Kind of a pain that I don't remember from prior years... :annoyed
The dollar amount option clearly changed this year. I’ve done 4 this year and they’re all share amount. I just go in and sell an extra share for cash and then transfer the dollar amount on the next day to get the exact amount. It seems the dollar conversions occur immediately, so that’s new as well. They take the and they giveth

Cheers
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Re: Seems like Roth conversions are harder with the brokerage accounts

Post by Running Bum »

bhluckyusaguy wrote: Sun Dec 05, 2021 2:34 pm I just did a trial run and there is the option to input the number shares (all or partial) I want to sell for the mutual fund I want to convert to the Roth. There is also a price listed for the fund so I can calculate the estimated amount of the conversion. For example, if the price is $100 and I want to convert $75,000, then I input 750 shares.
Except that you may not actually convert $75,000. It depends on what the price is when the conversion actually takes place. If you want to convert "about $75,000" this works fine. If you want to convert an exact amount, you'll have to sell the shares before, and transfer that dollar amount from your settlement account.
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Re: Seems like Roth conversions are harder with the brokerage accounts

Post by retiredjg »

Running Bum wrote: Sun Dec 05, 2021 4:00 pm
bhluckyusaguy wrote: Sun Dec 05, 2021 2:34 pm I just did a trial run and there is the option to input the number shares (all or partial) I want to sell for the mutual fund I want to convert to the Roth. There is also a price listed for the fund so I can calculate the estimated amount of the conversion. For example, if the price is $100 and I want to convert $75,000, then I input 750 shares.
Except that you may not actually convert $75,000. It depends on what the price is when the conversion actually takes place. If you want to convert "about $75,000" this works fine. If you want to convert an exact amount, you'll have to sell the shares before, and transfer that dollar amount from your settlement account.
So you are saying you must transfer shares of a mutual fund but you can transfer a dollar amount from the settlement account? Is this just because the shares of the settlement account are each always worth $1?
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Re: Seems like Roth conversions are harder with the brokerage accounts

Post by rkhusky »

The limitation appears to depend on the type of tIRA account.

For me, Brokerage tIRA to MF Roth results in shares only and no changing of funds. (No requirement for first transitioning into settlement account)

MF tIRA -> Brokerage Roth appears to give full options (Livesoft).
As does, MF tIRA -> MF Roth (retiredjg).

Brokerage tIRA -> Brokerage Roth can only do shares. Does everyone in this category have to run the conversion through the settlement fund? Or can you convert to the same fund in the Roth as you are selling in tIRA?
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Re: Seems like Roth conversions are harder with the brokerage accounts

Post by jeffyscott »

rkhusky wrote: Sun Dec 05, 2021 4:06 pm The limitation appears to depend on the type of tIRA account.

For me, Brokerage tIRA to MF Roth results in shares only and no changing of funds. (No requirement for first transitioning into settlement account)
I only ever did one at Vanguard and it was just like yours, but I think maybe the OP's issue is that they are changing funds as well as converting :?:, or else it's because they wanted to do it in dollars not shares :?: . I don't think that it's related to the type of account.

At least I would hope that one can just convert shares of Fund X in a TIRA to shares of Fund X in a Roth, without having to sell and buy, whether the accounts are brokerage or MF only.
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Re: Seems like Roth conversions are harder with the brokerage accounts

Post by jeffyscott »

Running Bum wrote: Sun Dec 05, 2021 4:00 pm
bhluckyusaguy wrote: Sun Dec 05, 2021 2:34 pm I just did a trial run and there is the option to input the number shares (all or partial) I want to sell for the mutual fund I want to convert to the Roth. There is also a price listed for the fund so I can calculate the estimated amount of the conversion. For example, if the price is $100 and I want to convert $75,000, then I input 750 shares.
Except that you may not actually convert $75,000. It depends on what the price is when the conversion actually takes place. If you want to convert "about $75,000" this works fine. If you want to convert an exact amount, you'll have to sell the shares before, and transfer that dollar amount from your settlement account.
Doesn't Vanguard show the price that they are using for your conversion when you enter it? Doesn't the conversion happen immediately?
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Re: Seems like Roth conversions are harder with the brokerage accounts

Post by Gd_Enf_56 »

jeffyscott
Doesn't Vanguard show the price that they are using for your conversion when you enter it? Doesn't the conversion happen immediately?
On my tIRA /Roth Conversion page, Vanguard shows Friday's closing price/NAV. If I were to do a $50K Roth Conversion today, I would estimate the number of shares to convert and base it on Friday's closing price. Yes, the Vanguard page where you enter the order would show a conversion amount but it is based on the last closing price(Friday). The actual conversion happens at the close of business on Monday (i.e. tomorrow) and the amount would be based on Monday's closing price.

If I waited until tomorrow to place the order (before the 4PM closing), the conversion amount would still get the Monday closing price. That is how I have done it previously. I would also get a better guess if the closing price would be higher or lower than the previous one.
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Re: Seems like Roth conversions are harder with the brokerage accounts

Post by Running Bum »

jeffyscott wrote: Sun Dec 05, 2021 4:33 pm Doesn't Vanguard show the price that they are using for your conversion when you enter it? Doesn't the conversion happen immediately?
Maybe I'm mistaken. I'll probably have a small end of year conversion to verify it. I was just thinking that most transactions aren't immediate but maybe this one is.
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Re: Seems like Roth conversions are harder with the brokerage accounts

Post by jeffyscott »

Running Bum wrote: Sun Dec 05, 2021 5:07 pm
jeffyscott wrote: Sun Dec 05, 2021 4:33 pm Doesn't Vanguard show the price that they are using for your conversion when you enter it? Doesn't the conversion happen immediately?
Maybe I'm mistaken. I'll probably have a small end of year conversion to verify it. I was just thinking that most transactions aren't immediate but maybe this one is.
Yeah, I think it's worth checking. I don't know how Vanguard or others do it, but they do happen immediately at Schwab, using the previous closing price to determine the value for tax reporting. I think they can do that because it's not really a transaction for the mutual fund, the shares just move to a different account.

I was pleasantly surprised when I did the first one a few years ago, was expecting there to be a delay and that the price would actually be the next closing price rather than the previous one.
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Re: Seems like Roth conversions are harder with the brokerage accounts

Post by an_asker »

Leif wrote: Sun Dec 05, 2021 1:54 pm
tadamsmar wrote: Sun Dec 05, 2021 12:52 pm Is this the new normal, or did I miss an easier way to do it?
I use Fidelity. It works the way you describe - via shares for a Roth conversion.

I wish there was an option at Fidelity to enter a dollar amount for the conversion.

However, Fidelity does allow you to enter the transfer after the market close. So I wait for the market close + 2 hours to get the current day pricing. Then I divide the amount to be converted by the day's close pricing, giving me shares to convert. The transfer is immediate. I don't understand why a $ amount cannot be entered and Fidelity calculates the shares and does the transfer once it knows the closing price for the day.

They offer that for selling using tax lots. You sell using an $ amount and the ordering of your tax lots. It gives you a estimate of the shares from each tax lot. After the market close it sells the exact dollar amount you entered using the tax lot order you provided.
I got blindsided by (ease and quickness) Fidelity last week. The market was going down - I assumed (WRONG!) that if I transferred a fund holding from Rollover IRA to Roth IRA, it would go through later that day, after the market closed. However, it transferred instantaneously. Now, I am still unaware of whether I will get a 8606 based on the fund value the previous night or that night (which is what I wanted, so I get a tax bill on the lower amount).

I didn't realize that there was an option to delay the transfer. (Maybe there isn't and I am misunderstanding what you wrote)
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Re: Seems like Roth conversions are harder with the brokerage accounts

Post by BigJohn »

I've done Roth conversions at VG for 5 years now. Here's my experience as I find the experience using brokerage accounts very easy. However, the objectives/needs of others might be different so YMMV.

Roth was opened as a brokerage account, converted tIRA to brokerage account in order to be able to do conversions on-line. All holdings are mutual funds not ETFs. I wanted to do direct transfers of shares to minimize time out of the market risk. I did not want to sell to cash, move $ and then rebuy. My whole Roth conversion process is a "close enough" estimate so while I have a target amount, a few $$ either way isn't a big deal. To do the conversion I look at yesterdays price, calculate the shares required and execute the transfer. This takes about 3 or 4 clicks and less than 2-3 minutes. Because they are mutual funds there is no real-time price or immediate execution. The transfer happens at the end of that day at the closing price, not sure how it works with ETFs. If transferring stock MFs, I'll do this in the late afternoon to minimize the time window for a big market move.

As I said, this fits my needs perfectly and is simple and easy. However, if you really need an exact $$ amount transferred, then a different and more complex process would be required.
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Re: Seems like Roth conversions are harder with the brokerage accounts

Post by jeffyscott »

an_asker wrote: Mon Dec 06, 2021 7:31 am
Leif wrote: Sun Dec 05, 2021 1:54 pm
tadamsmar wrote: Sun Dec 05, 2021 12:52 pm Is this the new normal, or did I miss an easier way to do it?
I use Fidelity. It works the way you describe - via shares for a Roth conversion.

I wish there was an option at Fidelity to enter a dollar amount for the conversion.

However, Fidelity does allow you to enter the transfer after the market close. So I wait for the market close + 2 hours to get the current day pricing. Then I divide the amount to be converted by the day's close pricing, giving me shares to convert. The transfer is immediate. I don't understand why a $ amount cannot be entered and Fidelity calculates the shares and does the transfer once it knows the closing price for the day.

They offer that for selling using tax lots. You sell using an $ amount and the ordering of your tax lots. It gives you a estimate of the shares from each tax lot. After the market close it sells the exact dollar amount you entered using the tax lot order you provided.
I got blindsided by (ease and quickness) Fidelity last week. The market was going down - I assumed (WRONG!) that if I transferred a fund holding from Rollover IRA to Roth IRA, it would go through later that day, after the market closed. However, it transferred instantaneously. Now, I am still unaware of whether I will get a 8606 based on the fund value the previous night or that night (which is what I wanted, so I get a tax bill on the lower amount).

I didn't realize that there was an option to delay the transfer. (Maybe there isn't and I am misunderstanding what you wrote)
Sounds like they do it the same way as Schwab.

I had the same mistaken assumption when I did my first one at Schwab, where I thought of it as being like a mutual fund transaction that would happen at the closing price. I was surprised when it happened immediately and used the current value, meaning the last reported price, which was the closing price from the previous day.

I think if Leif, instead of waiting 2 hours, did the conversion shortly after the market close it would use the previous day's closing price, as Schwab does.
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Re: Seems like Roth conversions are harder with the brokerage accounts

Post by jeffyscott »

BigJohn wrote: Mon Dec 06, 2021 7:47 amTo do the conversion I look at yesterdays price, calculate the shares required and execute the transfer. This takes about 3 or 4 clicks and less than 2-3 minutes. Because they are mutual funds there is no real-time price or immediate execution. The transfer happens at the end of that day at the closing price, not sure how it works with ETFs. If transferring stock MFs, I'll do this in the late afternoon to minimize the time window for a big market move.
So, just to be completely clear, if you did an in-kind Roth conversion at 1 PM EST today, Vanguard would not do the conversion until tonight and would use today's closing price?

That is completely different from how it would work at Schwab (and, perhaps, Fidelity :?: ).

I did my most recent conversion about 15 minutes after the market close on Dec. 2. Because of a recent discussion, I wanted to verify that it occurred immediately in the account history, etc. (I already knew it would use the last available price, meaning the Dec. 1 close). So after doing the conversion, I looked at the "online transfer" page and it showed the status as "completed". I also immediately looked in my transaction history and it listed this as "Journaled Shares" added to the Roth, with the number of shares listed and the Dec. 1 closing price listed. And, finally, in my account summary it showed the balance change due to the transfer of the shares, my Roth balance was increased and TIRA reduced.
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Re: Seems like Roth conversions are harder with the brokerage accounts

Post by an_asker »

jeffyscott wrote: Mon Dec 06, 2021 8:07 am
BigJohn wrote: Mon Dec 06, 2021 7:47 amTo do the conversion I look at yesterdays price, calculate the shares required and execute the transfer. This takes about 3 or 4 clicks and less than 2-3 minutes. Because they are mutual funds there is no real-time price or immediate execution. The transfer happens at the end of that day at the closing price, not sure how it works with ETFs. If transferring stock MFs, I'll do this in the late afternoon to minimize the time window for a big market move.
So, just to be completely clear, if you did an in-kind Roth conversion at 1 PM EST today, Vanguard would not do the conversion until tonight and would use today's closing price?

That is completely different from how it would work at Schwab (and, perhaps, Fidelity :?: ).

I did my most recent conversion about 15 minutes after the market close on Dec. 2. Because of a recent discussion, I wanted to verify that it occurred immediately in the account history, etc. (I already knew it would use the last available price, meaning the Dec. 1 close). So after doing the conversion, I looked at the "online transfer" page and it showed the status as "completed". I also immediately looked in my transaction history and it listed this as "Journaled Shares" added to the Roth, with the number of shares listed and the Dec. 1 closing price listed. And, finally, in my account summary it showed the balance change due to the transfer of the shares, my Roth balance was increased and TIRA reduced.
My Fidelity experience matches your Schwab experience. Naively expecting the transfer to happen at the end of the day, I submitted a transfer order on one of the days that the market was going down. In two minutes, voila :oops: , the shares were in the Roth. Needless to say, I haven't received the 8606, but I bet it will list the previous day's fund price!
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tadamsmar
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Re: Seems like Roth conversions are harder with the brokerage accounts

Post by tadamsmar »

I am learning a bit more about the process.

From the Account Overview (which is the login page), I can click the Activity tab. The from there I click Orders tab.

Both my orders from yesterday are listed there. If I click on the order date then I can get a bit more detail.

My first order is listed as "Pending". This is an order where sold Trad account shares and moved the money to a Roth account settlement fund. This one shows the amount but it indicates that the amount may be an estimate. There is no information on where the money is going, so I have to assume I got that part right. But it is represented as a "Transfer(out)". The estimated amount is $42,903.08. I will see if it changes after confirmation, but I have some fudge margins in my process anyway to avoid exceeding my AGI limit.

My second order is listed as "In progress". This is the order where I sold Trad account shares and moved the money to the Trad settlement fund. This one shows the exact amount sold in dollars. Also, this order can be cancelled since it is not a Roth conversion yet.

I did not check to see if all this information was available yesterday right after I placed the orders.
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Leif
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Re: Seems like Roth conversions are harder with the brokerage accounts

Post by Leif »

an_asker wrote: Mon Dec 06, 2021 7:31 am I got blindsided by (ease and quickness) Fidelity last week. The market was going down - I assumed (WRONG!) that if I transferred a fund holding from Rollover IRA to Roth IRA, it would go through later that day, after the market closed. However, it transferred instantaneously. Now, I am still unaware of whether I will get a 8606 based on the fund value the previous night or that night (which is what I wanted, so I get a tax bill on the lower amount).

I didn't realize that there was an option to delay the transfer. (Maybe there isn't and I am misunderstanding what you wrote)
Since I want to Roth convert a dollar amount I wait until the market is closed and I have the day's closing price. Then I do the calculation and enter the number of shares to convert. As I recall, Fidelity said I have until 7 PM ET to get that day's price. I do it as soon as I have the day's closing price, which at Fidelity seems to be around + 2 hours after closing. I don't know of any way to delay the transfer. As you say it is immediate. Like moving cash from one account to another. I'm not sure if the process is the same for ETFs, since I only have one and I've not tried to Roth convert it. I wish I could enter the transaction, as a dollar amount, anytime during the day, and get the end of day pricing for tax purposes. But maybe that is why I cannot enter a dollar amount. Since the transfer is immediate than how many shares should be transferred? They don't know until the end of day pricing.

I think you will get end of day price on your mutual fund. If you find out different from Fidelity please let us know!
Last edited by Leif on Mon Dec 06, 2021 12:17 pm, edited 1 time in total.
diy60
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Re: Seems like Roth conversions are harder with the brokerage accounts

Post by diy60 »

an_asker wrote: Mon Dec 06, 2021 8:16 am Needless to say, I haven't received the 8606, but I bet it will list the previous day's fund price!
Maybe you meant something else, but you don't "receive" form 8606. You fill out form 8606 as part of your tax return.
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Re: Seems like Roth conversions are harder with the brokerage accounts

Post by an_asker »

diy60 wrote: Mon Dec 06, 2021 11:27 am
an_asker wrote: Mon Dec 06, 2021 8:16 am Needless to say, I haven't received the 8606, but I bet it will list the previous day's fund price!
Maybe you meant something else, but you don't "receive" form 8606. You fill out form 8606 as part of your tax return.
Sorry my bad. To be honest, as this year is the first time I am doing so, I don't know what form it is that the brokerage will mail me. :oops:

So yes, I meant to say whatever form I receive that lists how much got converted from Rollover IRA to Roth.
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Re: Seems like Roth conversions are harder with the brokerage accounts

Post by an_asker »

Leif wrote: Mon Dec 06, 2021 11:00 am [...]
I think you will get end of day price on your mutual fund. If you find out different from Fidelity please let us know!
While I hope so, I am not sure ...

How/when will I know? I guess I could call Fidelity sometime today...
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Re: Seems like Roth conversions are harder with the brokerage accounts

Post by Big Dog »

I have brokerage accounts at Vanguard and find the Roth conversions easy. They even have a 'Convert' button on my tIRA account.
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jeffyscott
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Re: Seems like Roth conversions are harder with the brokerage accounts

Post by jeffyscott »

an_asker wrote: Mon Dec 06, 2021 12:42 pm
Leif wrote: Mon Dec 06, 2021 11:00 am [...]
I think you will get end of day price on your mutual fund. If you find out different from Fidelity please let us know!
While I hope so, I am not sure ...

How/when will I know? I guess I could call Fidelity sometime today...
I would guess that the Roth account shows the transaction, I would look at that account history/activity. Schwab shows the shares transferred and the price of those shares in my account history, I'd assume other brokerages do the same.

The withdrawal from TIRA for the conversion will be reported on a 1099R.
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Re: Seems like Roth conversions are harder with the brokerage accounts

Post by BigJohn »

jeffyscott wrote: Mon Dec 06, 2021 8:07 am
BigJohn wrote: Mon Dec 06, 2021 7:47 amTo do the conversion I look at yesterdays price, calculate the shares required and execute the transfer. This takes about 3 or 4 clicks and less than 2-3 minutes. Because they are mutual funds there is no real-time price or immediate execution. The transfer happens at the end of that day at the closing price, not sure how it works with ETFs. If transferring stock MFs, I'll do this in the late afternoon to minimize the time window for a big market move.
So, just to be completely clear, if you did an in-kind Roth conversion at 1 PM EST today, Vanguard would not do the conversion until tonight and would use today's closing price?

That is completely different from how it would work at Schwab (and, perhaps, Fidelity :?: ).

I did my most recent conversion about 15 minutes after the market close on Dec. 2. Because of a recent discussion, I wanted to verify that it occurred immediately in the account history, etc. (I already knew it would use the last available price, meaning the Dec. 1 close). So after doing the conversion, I looked at the "online transfer" page and it showed the status as "completed". I also immediately looked in my transaction history and it listed this as "Journaled Shares" added to the Roth, with the number of shares listed and the Dec. 1 closing price listed. And, finally, in my account summary it showed the balance change due to the transfer of the shares, my Roth balance was increased and TIRA reduced.
Yes, the transaction was shown as pending and balances were changed the next day at the closing price. However, I’m not sure how it could work any other way given that I’m transferring mutual funds that do not have the real time prices available to do the required value calculation. As I said in my post, it may not work this way for ETF’s as I have no experience. Maybe another VG user that does Roth conversions with ETF can add that detail.

Edited to add the following…

I misread you note, thought you were talking about real time pricing not prior day.

To be 100% sure about VG’s execution I just logged into my VG account and started the process. I get a screen asking me to enter the number of shares and it gives me an estimated conversion amount with the following footnote.

This total is estimated based on the previous NAV or closing price. The actual conversion amount is based on today's NAV or closing price. You'll receive final confirmation with the transaction details for all of the holdings converted. Holdings other than your money market settlement fund will be transferred in-kind.
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Re: Seems like Roth conversions are harder with the brokerage accounts

Post by retiredjg »

BigJohn wrote: Mon Dec 06, 2021 5:47 pm This total is estimated based on the previous NAV or closing price. The actual conversion amount is based on today's NAV or closing price. You'll receive final confirmation with the transaction details for all of the holdings converted. Holdings other than your money market settlement fund will be transferred in-kind.
This is a potential problem for people who want/need to convert a certain amount and no more.

If I understand correctly, the only way to avoid that is to use a two step process - going to money market in the settlement fund and then doing a conversion on a certain number of dollars.

A disappointment and certainly no improvement over the old method.
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Re: Seems like Roth conversions are harder with the brokerage accounts

Post by BigJohn »

retiredjg wrote: Mon Dec 06, 2021 7:28 pm
BigJohn wrote: Mon Dec 06, 2021 5:47 pm This total is estimated based on the previous NAV or closing price. The actual conversion amount is based on today's NAV or closing price. You'll receive final confirmation with the transaction details for all of the holdings converted. Holdings other than your money market settlement fund will be transferred in-kind.
This is a potential problem for people who want/need to convert a certain amount and no more.

If I understand correctly, the only way to avoid that is to use a two step process - going to money market in the settlement fund and then doing a conversion on a certain number of dollars.

A disappointment and certainly no improvement over the old method.
As I said in my original post, I think the process is easy and simple but my Roth conversion strategy is based on “close enough”. Way too many year-end unknowns and surprises for me to go right up to a tax cliff like the IRMMA breakpoints among others.
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Re: Seems like Roth conversions are harder with the brokerage accounts

Post by Stubbie »

retiredjg wrote: Mon Dec 06, 2021 7:28 pm
BigJohn wrote: Mon Dec 06, 2021 5:47 pm This total is estimated based on the previous NAV or closing price. The actual conversion amount is based on today's NAV or closing price. You'll receive final confirmation with the transaction details for all of the holdings converted. Holdings other than your money market settlement fund will be transferred in-kind.
This is a potential problem for people who want/need to convert a certain amount and no more.

If I understand correctly, the only way to avoid that is to use a two step process - going to money market in the settlement fund and then doing a conversion on a certain number of dollars.

A disappointment and certainly no improvement over the old method.
This is correct. Just did a couple of conversions earlier this month. Sold ETF shares to money market and it took several days to settle before funds were available for conversion. Next transfer was in kind shares. Happened overnight. I knew total dollar amount I wanted to convert so waited until 3:50 pm, looked up real time quote, and put in the conversion order right before market close. Vanguard does not make it easy but it is doable and gets you very close to desired dollar amount. If you go by Vanguard's estimate on the conversion screen, you will be using yesterday's closing prices. Gotta love it!
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Re: Seems like Roth conversions are harder with the brokerage accounts

Post by jeffyscott »

BigJohn wrote: Mon Dec 06, 2021 7:59 pm
retiredjg wrote: Mon Dec 06, 2021 7:28 pm
BigJohn wrote: Mon Dec 06, 2021 5:47 pm This total is estimated based on the previous NAV or closing price. The actual conversion amount is based on today's NAV or closing price. You'll receive final confirmation with the transaction details for all of the holdings converted. Holdings other than your money market settlement fund will be transferred in-kind.
This is a potential problem for people who want/need to convert a certain amount and no more.

If I understand correctly, the only way to avoid that is to use a two step process - going to money market in the settlement fund and then doing a conversion on a certain number of dollars.

A disappointment and certainly no improvement over the old method.
As I said in my original post, I think the process is easy and simple but my Roth conversion strategy is based on “close enough”. Way too many year-end unknowns and surprises for me to go right up to a tax cliff like the IRMMA breakpoints among others.
Based on the time of your post (after market close) and the wording ("today's NAV") of the message, it looks like you could enter the conversion after market close and still get that day's closing price? If so, then you can have a very good idea of how much the price might change.

I wonder if it would still say "today's NAV" much later, like now, when today's NAV is actually known?
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Re: Seems like Roth conversions are harder with the brokerage accounts

Post by tadamsmar »

So, today I supposedly have 20,000 in my Trad settlement account. It indicates that 20,000 is available to trade.

But when I try to do anything with it. The next screen shows 0 in the settlement account when I try to buy or exchange. I think I have tried every button on the holding page (Buy, Transfer) but all I see is a goose egg for the settlement fund.

The other order completed as a in-kind Roth conversion that is over $600 more than I intended. Fortunately, I left some wiggle room so this till not push my AGI over my limit.

Edit: I did find that the 20 grand shows up if I get to the Roth conversion page. I just converted it to a Roth. I am guessing that it will show up in the settlement account of the Roth tomorrow.
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Re: Seems like Roth conversions are harder with the brokerage accounts

Post by tadamsmar »

One good thing. The in-kind transfer to the Roth did not cause the trading curb to kick in. So, I could do my planned rebalancing transaction and move some REIT to total international immediately.
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Re: Seems like Roth conversions are harder with the brokerage accounts

Post by tadamsmar »

jeffyscott wrote: Mon Dec 06, 2021 8:26 pm
BigJohn wrote: Mon Dec 06, 2021 7:59 pm
retiredjg wrote: Mon Dec 06, 2021 7:28 pm
BigJohn wrote: Mon Dec 06, 2021 5:47 pm This total is estimated based on the previous NAV or closing price. The actual conversion amount is based on today's NAV or closing price. You'll receive final confirmation with the transaction details for all of the holdings converted. Holdings other than your money market settlement fund will be transferred in-kind.
This is a potential problem for people who want/need to convert a certain amount and no more.

If I understand correctly, the only way to avoid that is to use a two step process - going to money market in the settlement fund and then doing a conversion on a certain number of dollars.

A disappointment and certainly no improvement over the old method.
As I said in my original post, I think the process is easy and simple but my Roth conversion strategy is based on “close enough”. Way too many year-end unknowns and surprises for me to go right up to a tax cliff like the IRMMA breakpoints among others.
Based on the time of your post (after market close) and the wording ("today's NAV") of the message, it looks like you could enter the conversion after market close and still get that day's closing price? If so, then you can have a very good idea of how much the price might change.

I wonder if it would still say "today's NAV" much later, like now, when today's NAV is actually known?
After closing, I think you would get tomorrow's closing price. I did a transaction on Sunday and apparently got Monday's closing price. I did not get Friday's closing price which provided the dollar value estimate of the trade.
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Re: Seems like Roth conversions are harder with the brokerage accounts

Post by tadamsmar »

Stubbie wrote: Mon Dec 06, 2021 8:16 pm This is correct. Just did a couple of conversions earlier this month. Sold ETF shares to money market and it took several days to settle before funds were available for conversion. Next transfer was in kind shares. Happened overnight. I knew total dollar amount I wanted to convert so waited until 3:50 pm, looked up real time quote, and put in the conversion order right before market close. Vanguard does not make it easy but it is doable and gets you very close to desired dollar amount. If you go by Vanguard's estimate on the conversion screen, you will be using yesterday's closing prices. Gotta love it!
This looks like the best way to get close to a specific dollar amount.

If I understand correctly, I could have looked up the value of a REIT ETF share at 3:50 on Monday and used that to determine the number of shares to convert. Then, do the conversion before the market closes. That does not leave much time for the price to change before closing. A big change would be unlikely but not impossible. Seems that a big increase would be very unlikely.
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Re: Seems like Roth conversions are harder with the brokerage accounts

Post by tadamsmar »

retiredjg wrote: Mon Dec 06, 2021 7:28 pm
BigJohn wrote: Mon Dec 06, 2021 5:47 pm This total is estimated based on the previous NAV or closing price. The actual conversion amount is based on today's NAV or closing price. You'll receive final confirmation with the transaction details for all of the holdings converted. Holdings other than your money market settlement fund will be transferred in-kind.
This is a potential problem for people who want/need to convert a certain amount and no more.

If I understand correctly, the only way to avoid that is to use a two step process - going to money market in the settlement fund and then doing a conversion on a certain number of dollars.

A disappointment and certainly no improvement over the old method.
Looks like the process of converting a certain exact amount causes your money to be out of the market for 2 days. And you have to execute 3 orders over 3 days. For instance: Your first order converts 10,000 of Trad mutual fund to dollars in the Trad settlement fund at close on Monday. You second order converts the money in the Trad settlement fund to money in the Roth settlement fund at close on Tuesday. Your third order buys Roth mutual fund shares using the money in the Roth settlement fund and that is executed at close on Wednesday.
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Re: Seems like Roth conversions are harder with the brokerage accounts

Post by retiredjg »

tadamsmar wrote: Tue Dec 07, 2021 6:47 am
retiredjg wrote: Mon Dec 06, 2021 7:28 pm
BigJohn wrote: Mon Dec 06, 2021 5:47 pm This total is estimated based on the previous NAV or closing price. The actual conversion amount is based on today's NAV or closing price. You'll receive final confirmation with the transaction details for all of the holdings converted. Holdings other than your money market settlement fund will be transferred in-kind.
This is a potential problem for people who want/need to convert a certain amount and no more.

If I understand correctly, the only way to avoid that is to use a two step process - going to money market in the settlement fund and then doing a conversion on a certain number of dollars.

A disappointment and certainly no improvement over the old method.
Looks like the process of converting a certain exact amount causes your money to be out of the market for 2 days. And you have to execute 3 orders over 3 days. For instance: Your first order converts 10,000 of Trad mutual fund to dollars in the Trad settlement fund at close on Monday. You second order converts the money in the Trad settlement fund to money in the Roth settlement fund at close on Tuesday. Your third order buys Roth mutual fund shares using the money in the Roth settlement fund and that is executed at close on Wednesday.
Oh boy. Can't wait. :(

Just got the confirmation for the Roth conversion I did on the old platform on Saturday. 1 step (a few mouse clicks). No math converting dollars to shares. Taxes withheld with no phone call. No waiting. No time out of the market. Worked flawlessly.

I'm generally not much of a grumbler, but this is just ridiculous.
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Re: Seems like Roth conversions are harder with the brokerage accounts

Post by BigJohn »

jeffyscott wrote: Mon Dec 06, 2021 8:26 pm Based on the time of your post (after market close) and the wording ("today's NAV") of the message, it looks like you could enter the conversion after market close and still get that day's closing price? If so, then you can have a very good idea of how much the price might change.

I wonder if it would still say "today's NAV" much later, like now, when today's NAV is actually known?
I went in early this morning about an hour before the open. Prices had been updated to 12/6 close. Conversion amounts now based on that number but still called estimated with the same footnote. So, I presume that an order entered then would execute at the 12/7 close price.

Based on my obviously limited testing, it appears that VG may execute at the next close no matter when entered? Unclear though when exactly the day changes. However, I'd speculate that it might be when the system does it's overnight update. Guessing it accumulates all the orders entered since the previous update and executes in a batch at the newly updated price. If this is the case, then your comment about an order entered after the close but before the update would be valid.
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Re: Seems like Roth conversions are harder with the brokerage accounts

Post by BigJohn »

Question for some of you on this discussion as I'm curious. What is driving your need for a Roth conversion of an exact dollar amount?
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Re: Seems like Roth conversions are harder with the brokerage accounts

Post by BigJohn »

tadamsmar wrote: Tue Dec 07, 2021 6:21 am After closing, I think you would get tomorrow's closing price. I did a transaction on Sunday and apparently got Monday's closing price. I did not get Friday's closing price which provided the dollar value estimate of the trade.
See my post a couple above. If my speculation is correct, the switch in price happens at the overnight system update rather than at the close. Fits your experience as the Friday update was complete by Sunday so you got the price at the next update on Monday night.
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Re: Seems like Roth conversions are harder with the brokerage accounts

Post by indexfundfan »

It's nice to hear that the Roth conversions are instantaneous / same day at Fidelity and Schwab.

I submitted a Roth conversion at Etrade on Friday morning and it is still pending as of today (Tuesday).
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