Roth IRA conversions

[harveyak]

I am 73.  I started doing Roth conversions in 2018. I plan to do them every year until my IRA balance is under $100,000. I have one Roth account which contains amounts converted from 2018, 2019 and 2020. Should I keep each year's conversion in a separate Roth IRA so I can keep track of what is taxable if and when I take withdrawals?  I have converted $175,000 and the Roth IRA is now $223,000 but I do not know how much of the $48,000 gain is for each year's conversion.  

[dmertz · Accepted solution]

There is generally no benefit to keeping separate Roth conversions in separate accounts because all of your Roth IRA accounts are treated as a single Roth IRA for tax purposes.  The investment gains subsequent to the Roth conversions or contributions are all simply treated all the same as investment gains no matter which account they are in.  The gains are considered in aggregate rather than being in any particular Roth IRA.

Since you are age 73, if your first Roth IRA contribution what for a year before 2017 or your first Roth IRA was established before 2017, your Roth IRAs are qualified and any amount can be distributed tax and penalty free from any of your Roth IRA accounts and there is no need to know basis from gains.

[MinhT1]

You do not need to keep each year's conversion in a separate Roth IRA account.

Distributions from a Roth IRA are tax-free when you are over 59 1/2 and the distribution occurs 5 years after you have funded your first Roth IRA account.

Distributions of your contributions and the amounts rolled over do not have bear tax or penalty if if the five-year rule is not observed. 

As you are over 59 1/2, the only case where you may pay taxes is on the earnings (after exhausting your amounts rolled over) for withdrawals less than 5 years after you opened your first Roth IRA.