Open topic with navigation

IRA Conversion to a Roth Account

Use this page to perform a full conversion from your Traditional, Rollover or SEP IRA account to an IB Roth IRA account. In a full conversion, all assets in your Traditional or SEP IRA account are transferred to your Roth IRA account.

The following rules and procedures apply to IRA conversions:

• For IRA Conversions from another Custodian/Trustee, you must open an Roth IRA account if you do not already have one.
• For IRA Conversions from a Traditional IRA or Rollover or SEP IRA account, you must open a Roth IRA if you do not already have one.
• We only allow full conversions. For instructions on how to perform a partial conversion, see Partial IRA Conversions
• If you request a full conversion, your existing Traditional/SEP IRA account will be closed upon completion of the transfer.
• A conversion to a Roth IRA is subject to federal and possibly state income tax withholding, unless you elect not to have withholding apply. You may either elect not to withhold federal income tax or you may elect to withhold at a rate not less than 10%.
• If federal income tax is withheld, state income tax may also be withheld. Where state income tax applies, the rate will be no less than the state's minimum withholding requirement. Your state of residence (the legal address for your IRA account), will determine your state income tax withholding requirement.
  
  Consult your tax advisor about your tax withholding requirement.
• To qualify for an IRA conversion, the total cash available in your Traditional or SEP IRA account must be greater than the federal tax amount + the state tax amount + 2% of total assets being converted. Stated as an equation, this requirement is:
  
  Total Cash Available > Federal Tax Amount + State Tax Amount + 2% of total assets being converted
• Transfers of securities positions from a Traditional or SEP IRA to a Roth IRA will only be accepted between accounts with matching names and taxpayer identification numbers.
• Refer to IRS Publication 590, Individual Retirement Arrangements and consult your tax advisor regarding your individual tax situation when deciding to convert.

If you are opening a new account for the purpose of doing an IRA conversion or recharacterization, you should select the funding option IRA Conversion or Recharacterization in the Funding section of the account application.

Who can access the IRA Conversion to a Roth Account page?

You can access this page if you are an IRA User with a Traditional, Rollover or SEP IRA account.

To perform an IRA conversion to an IB Roth IRA account

1. Log into Account Management for the Traditional or SEP IRA account you want to convert.
2. Click Manage Account > Settings > IRA > IRA Conversion to Roth Account.
   
3. In the Transfer Method list, select IRA Conversion - Transfer Assets to Roth Account.
4. Enter the username, password and account ID of the Roth IRA account to which you want to convert your Traditional, Rollover or SEP IRA account, then click Continue.
5. A confirmation number is sent to your email address of record. Enter the number on the next screen, then click Confirm.
   
   If you did not receive a confirmation number, click Request Confirmation Number to receive a new confirmation number.
6. Be sure to read and understand the important rules governing IRA conversions before you make your Federal and State Income Tax withholding elections.

Enter your Federal Income Tax withholding rate or elect not to have Federal Income Tax withheld. The tax rate is a percentage of your total account equity. Click the appropriate radio button to indicate your choice.

7. On the same screen, enter your State Income Tax withholding rate or elect not to have Federal Income Tax withheld. The tax rate is a percentage of your total account equity. Click the appropriate radio button to indicate your choice.
8. Click Continue. The status of your request appears on the screen.