How to Convert to a Roth

I’d like to convert my traditional IRA to a Roth. What steps do I need to take?

The $100,000 income limit for converting a traditional IRA to a Roth was eliminated in 2010, and now anyone can qualify to make the switch. You can also roll money from a former employer’s 457 deferred compensation plan into a Roth IRA.

ICMA-RC’s Roth conversion page has information to help you determine whether or not a Roth conversion is right for you. If you do decide to convert an ICMA-RC IRA or 457, you may access the necessary forms online. If you’d like to convert a traditional IRA from another administrator into a Roth IRA at ICMA-RC, you’ll need to first complete a Vantagepoint Traditional and Roth IRA Account Application to open an IRA account at ICMA-RC. Also keep in mind that you can only convert a 457 to a Roth IRA after you’ve separated from service. But you can convert a traditional IRA to a Roth at any time, regardless of your job status.

In either case, you’ll need to pay tax on the money you convert (except for any nondeductible contributions you have made), but then you’ll have the ability to access the money in the Roth—including all future earnings—tax-free after age 59½. A special benefit to converting in 2010 is that you can delay the tax bill until your 2011 and 2012 returns (split evenly over the two years), giving you extra time to save for the taxes, if you prefer. Other benefits to a Roth: You also won’t have to take required minimum distributions from the account and your heirs can inherit any money remaining in the Roth income-tax free.

If you have more questions about converting to a Roth, please contact your ICMA-RC Retirement Plans Specialist or our Investor Services team.

ICMA-RC’s Investor Services team is a group of FINRA-licensed professionals who are available to assist you. If you have questions about your retirement account or for Quarterly News, please call Investor Services at 800-669-7400 or email investorservices@icmarc.org.