Dividends Paid After a Roth Conversion

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Subject Author Date Dividends Paid After a Roth Conversion alex 12-03-2008  Re: Dividends Paid After a Roth Conversion Phil Marti 12-03-2008  Re: Dividends Paid After a Roth Conversion D. Stussy 12-04-2008
Posted by alex on December 3, 2008, 11:31 am Please log in for more thread options On 10/28 I converted my entire IRA into a Roth IRA, securities and cash. On 11/14 one of the stocks transferred into Roth paid $1000 dividend. The pay date was 11/14, the date of record for the dividend was 10/24 and the conversion date 10/28. The custodian deposited the $1000 dividend in the traditional IRA that I thought I was done with. Now the question is where does the $1000 belongs to: the traditional IRA or the Roth IRA? I know i can also convert the dividend to Roth but that will be taxable. Thanks, Alex -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by Phil Marti on December 3, 2008, 12:34 pm Please log in for more thread options "alex" wrote: > On 10/28 I converted my entire IRA into a Roth IRA, securities and > cash. > On 11/14 one of the stocks transferred into Roth paid $1000 > dividend. The pay date was 11/14, the date of record for the dividend > was 10/24 and the conversion date 10/28. > > The custodian deposited the $1000 dividend in the traditional IRA that > I thought I was done with. Now the question is where does the $1000 > belongs to: the traditional IRA or the Roth IRA? In the traditional. > I know i can also > convert the dividend to Roth but that will be taxable. Yes, you can, and yes, it will. Look at it this way. On the date of the conversion the value of the stock in the traditional was, in theory, depressed by the amount of the pending dividend. If you had converted before the record date the stock would have reflected the higher pre-dividend value, so you would have had more income from the initial conversion. -- Phil Marti Clarksburg, MD -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by D. Stussy on December 4, 2008, 9:57 am Please log in for more thread options > On 10/28 I converted my entire IRA into a Roth IRA, securities and > cash. > On 11/14 one of the stocks transferred into Roth paid $1000 > dividend. The pay date was 11/14, the date of record for the dividend > was 10/24 and the conversion date 10/28. > > The custodian deposited the $1000 dividend in the traditional IRA that > I thought I was done with. Now the question is where does the $1000 > belongs to: the traditional IRA or the Roth IRA? I know i can also > convert the dividend to Roth but that will be taxable. You asked the custodian to convert, but did you also ask him to close the traditional IRA account? If you didn't do that, such explains why it ended up in the traditional account. -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Similar Threads Posted Dividends I Paid Out On A Stock That I Have Sold Short December 23, 2006, 1:27 am Dividends paid on shares sold short March 20, 2008, 10:38 pm Roth IRA contribution, recharacterization, conversion, recharacterization, conversion? April 13, 2009, 11:03 am roth IRA conversion yes or no? December 20, 2006, 1:26 am Roth IRA conversion January 3, 2008, 5:12 pm Roth conversion October 24, 2008, 12:33 am Roth conversion questions November 17, 2006, 11:30 pm Another Roth conversion question November 19, 2006, 10:14 pm strategy for Roth conversion January 16, 2007, 7:40 pm BASIS Roth IRA conversion January 21, 2007, 4:18 pm