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Learning, Sharing, and Teaching => Investor Alley => Topic started by: Druid on December 15, 2014, 04:00:40 AM

Title: No Income This Year- Thinking About A Roth Conversion
Post by: Druid on December 15, 2014, 04:00:40 AM

I am a full time student. I have a few thousand dollars in a 401k account through a third party company and my money is invested in Vanguard-Wellington(but managed through the 3rd party Verisight). I have no income this year, but will have a decent income next year. I currently do not have any accounts opened with Vanguard; and I don't understand how easy it would be for Vanguard to pull my money from the 3rd party.

I definitely want to take advantage of the tax free Roth conversion in 2014. My intuition, inexperience aside, is telling me to just do the Roth conversion through the 3rd party and worry about transferring the account to Vanguard next year. Since I don't have any experience with this 3rd party "Verisight, Inc" , my major concern is the timing of the Roth conversion so it makes sense to me to just call them and have them do the Roth conversion. I think Verisight only sends me documentation once a year, so I might not meet the requirements of Vanguard listed here: Basically it says you need statements from the last 90 days. I do not have any statements.

Another option would be to close the account and reinvest in another IRA directly with Vanguard within the 60 day time table. I am concerned that if I do this option I will not be able to time the Roth conversion to hit in 2014 when my income is zero, and therefore the conversion won't be tax free. I guess I am worried that Verisight my stall my payment or have a lengthy process. On the other hand it might result in less fees through the Roth conversion. Also I do not have experience claiming a refund from the IRS if the plan administrator takes out taxes. What form do I fill out, etc. Also I am under the impression that dividends are being paid out in December, so I am not sure if I should factor this into my decision making process.

I guess I am looking for advice what is the best way to do this conversion while maximizing my chances that the conversion will be recognized in 2014. Its the holidays, so I want this to be as headache free as possible.
Title: Re: No Income This Year- Thinking About A Roth Conversion
Post by: MDM on December 15, 2014, 07:42:07 AM
Good thinking to do a conversion when you have no other income.

Are you still employed (e.g., full time student by virtue of being on leave of absence) by the company with whom you have the 401k?  If so you may not be able to withdraw the funds - if not there should be no problem.

As far as statements go, see  Appears you should be able to get statements online.  At worst, call Verisight and talk with them.

Talking with Vanguard is also worth doing.  They will be happy to take the money and may be able to help with the transfer.

Good luck!