Roth IRA Conversion Valuation Date

[Guest Kristanla]

It appears that, for a partial IRA conversion to a Roth in 2010, the IRA holder will need to wait until December 31, 2010 to value the consolidated IRA balances and determine tax consequences (assuming there is basis in the IRAs and they weren't all deductible contributions). My question is, does this "pro rata" valuation date of 12/31 apply when all IRA balances are converted (i.e., not a partial conversion)? Can the IRA holder in this instance use the IRA valuation as of the conversion date?

[John G]

I did a Roth conversion many years ago that involved a depressed stock. At that time, the valuation was supposed to be set as of the date of conversion. Oddly enough, the brokerage screwed this up...in part because the stock did not actually trade on the date they market the conversion. It did trade every day of the week when the conversion request was submitted. At the end of the year, the brokerage posted the price as of the conversion as the year end price. I disputed that and got a conversion date price based upon the last known trade.

Hope that helps.