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converting to a Roth

December 27th, 2008 at 07:20 am

Saving log - $7 tip box
Spending log - $0

In a more normal month, I would have taken what I collected in my tip box to the bank a few days ago. But a few days ago we would have been lucky to make it to work for a few hours. Today was a nearly normal work hour day, so I had a bit of time to make it to the bank.

I brought my lunch, so I didn't spend anything today. I'm in a good spot this month - near the end of the month and I still have over 300$ left.

I found out that converting my traditional IRAs to Roths in Vanguard is very easy - you basically "buy" the Roth from the proceeds of "selling" the traditional IRA. Vanguard then gives me a 1099-R, and I declare the proceeds of the traditional IRA as income. We make less than 100K, the 2005 and 2006 traditional IRA each dropped about 40% so I will be paying less tax on it, and I've put 15K in my 403B, so my income is so much lower compared to my withholding. The original expectation that I used to do that - I'll make more interest and capital gains in 2008 - ain't going to happen. Converting the traditional IRA to a Roth will be a tactical win-win-win for me.

3 Responses to “converting to a Roth”

  1. Amber Says:

    I've considered Vanguard and have heard nothing but postive things about them

  2. monkeymama Says:


    I wished I had waited until 2008. Could have saved a couple of thousand dollars in taxes. !!

  3. monkeymama Says:

    P.S. The annoying thing is all our fund companies (3?) kept our Traditional IRAs open with $0 though we don't plan to contribute again to a Tradiitonal. So, I have to get all those closed. Just as an FYI - you might want to ask they close it in the process. (It is so simple to open a new one later if you decide you need one later. In the meantime I don't think they charged us any fees, but I am surprised they haven't!)

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