The IRS allows you to move either cash or property from your traditional IRA to your Roth IRA.
Stocks count as property, which means that rather than taking out cash from your traditional IRA and putting it in a Roth IRA, you can simply take out the stocks and redeposit them in your Roth IRA. For example, if you own a certain stock in your traditional IRA and want to continue to hold that same stock in your Roth IRA, you can move the shares rather than having to sell the shares, move the money, and then reinvest in the same stock.
The amount of your conversion usually adds to your taxable income for that year. Even though you’re transferring stocks, you still have to pay the higher ordinary income tax rates on the conversion rather than the lower capital gains rates.
If you’ve made nondeductible contributions to the account, a fraction of your conversion will be nontaxable.
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