switch IRA from traditional to Roth

I called into Fidelity today and they were able to do my 2008 funds conversion over the phone. The poor performance of my retirement mutual funds allowed me to convert more shares while trying to stay in the appropriate tax bracket. I could have gone up one tax bracket and converted all of the remaining shares but I don’t think I would be able to afford those taxes in April.

Today I sent in the check for my 2007 Roth IRA contribution. This doesn’t help me complete this goal but funding a traditional IRA would have been a step in the wrong direction.

I filled out the forms and it looks like I’m going to owe Uncle Sam some $$$. I hadn’t made a 2007 IRA contribution yet so I could make a traditional IRA contribution to drop my earned income and reduce my tax burden. I think it’s more sensible to make a Roth IRA contribution and just bite a little bit of taxes for this year.

I have an appointment on Wednesday to see a retirement adviser at Fidelity. I have a rough projection for my 2007 tax obligations. I think that I need to recharacterize a large portion of my conversion so that I’ll be able to pay my tax obligations in April.

I think that my conversion may be too aggressive. What I’ve already converted may cost me too much come tax time.

I had 9% of my IRA funds in a ROTH account. I went in to the local Fidelity office and made a conversion and 54% of my IRA funds are now in ROTH accounts. I still need to consolidate accounts so that they are easier to manage. Right now I have multiple accounts with multiple companies. The paperwork is just a mess.

I spoke with a service representative from Fidelity today. I found out that I can’t convert from a traditional to Roth IRA for the 2006 calendar year. The conversion needed to have taken place before 31 December 2006. This is unlike contributions which are permitted until 15 April 2007.

I guess I’ll start planning what I can convert for 2007.

1. Figure out how much money I have in traditional IRAs.
2. Roughly calculate my 2006 tax obligations.
3. Determine how much money I can afford in taxes.
4. Perform a partial conversion/reclassification from traditional to Roth without killing myself with tax implications.
5. Consolidate my retirement funds to a single brokerage and reduce my paperwork (optional).