Will receipt of funds from IRA in Dec 98 qualify for conversion to Rot

[Guest MFred]

Per news articles posted on Roth IRA we site, I redeemed all shares in a traditional IRA and received a check for a "premature distribution" from my existing traditional IRA. Check is dated 29 Dec 98. According to the articles, I should be able to place the funds directly into a Roth IRA account, within 60 days, and use 4-year tax treatment. However, Janus, Vanguard and Schwab state this is not possible--funds must go into traditional IRA first; and, then be converted to a Roth. This defeats the purpose as I cannot then use 4-year treatment (as stated in the articles). Where can I put this "distribution" from my traditional IRA in 1998 to qualify as a Roth to pay tax over 4 years? All companies I have spoken to state the "conversion" had to be accomplished in 1998 to qualify (redemption and conversion). I am at a loss. Obviously, I have to act within 60 days for the rollover; but, I would like to put it into a Roth for the 4-year treatment. According to the companies, the only option is to place the entire amount in a traditional IRA and convert 1/4 in 99. Any ideas would be greatly appreciated.

[BPickerCPA]

DO NOT put this money back into a traditional IRA! You can definitely put this money into a Roth account. If the brokers are telling you no, they're ignorant. I already had this argument with people at Schwab, and they told me that they would agree to accept the deposit. Insist on going to supervisory personnel, until you get satisfaction.

[BPickerCPA]

If you contact me via email, I will try to assist you. You did not leave an email address. WeSixPicks@aol.com

(this is NOT a solicitation, I am just trying to help. It is not my intention to break any board rules, and if I did, I apologize)

[This message has been edited by BPickerCPA (edited January 04, 1999).]

[Guest Mark L]

MFred;

How did you make out on this?

[Guest greymann]

MFred, the recent 1998 tax act (the IRS Restructuring and Reform Act of 1998) makes it clear that the effective year of the conversion is the year that the distribution was made that was converted (new Internal Revenue Code Section 408A©(3)(B)). I am surprised the companies you mentioned did not know this.