How to Move Assets That Have Lost Value Into a Roth
You can transfer money or assets such as stocks and bonds from a traditional individual retirement account -- IRA -- into a Roth IRA. IRAs allow people to save money for retirement and invest that money with favorable tax rates. Most IRAs allow you to deduct the contribution to the account from your income tax, while Roths do not allow a deduction but the later distributions are tax-free. Transferring assets to a Roth that have lost value but that you expect to appreciate later can save you considerable money on taxes later.
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Instructions
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Request that your bank or brokerage account transfer assets for you. Bankers and brokers can transfer assets into IRAs once you give them permission. Different institutions have slightly different procedures, but expect to talk with a representative, fill out a request or order and sign documents for the institution to move your assets around.
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Fill out and sign any paperwork and return it to the institution that manages your IRA, or a representative. Some banks and brokerage firms may let you fill out and sign forms electronically.
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Pay your taxes. If you transfer assets from a traditional IRA to a Roth IRA, you must pay income taxes on the fair market value that your broker or banker quotes in the tax year that you make the transfer. You pay taxes when you transfer because you deducted the amount from your income when you deposited the money used to buy the assets into your traditional IRA. Once you transfer into a Roth, you do not pay taxes on that money again, no matter what the assets' value are later.
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Tips & Warnings
You may transfer assets between IRA accounts -- for example, from a traditional to a Roth -- but you may only transfer money into an IRA from a non-IRA account, such as your nonretirement brokerage account.
