<p>This is a tricky question and I was wondering if any of you know how these actions are treated. It's been a bad year from an income point of view, so we have a lot of tax deductions that will be wasted unless we use them up by transferring some money from a regular IRA to a Roth. This is pretty standard tax planning, the complexity is that I am thinking that it will adversely affect the schools assessment of our financial need, since it increases the AGI. Has any one out there dealt with this issue before and know the answer.
(also posted on Fin. Aid. thread)
Thanks.</p>
<p>I have not actually made the switch, but have been told by each office that they WILL adjust for that.</p>
<p>Do you know if an old IRA can be converted a little at a time (I guess a little less at a time after the market blow out!) or do you have to do the entire account at once?</p>
<p>I believe that how much you convert is a matter of your institution's policies, not the government's. If you are dealing with a large firm like Fidelity or Vanguard and you have a reasonable amount invested there over all, they will probably waive any minimum fees on establishing a separate Roth account.</p>
<p>somemom,</p>
<p>Yes, I believe a little at a time works just fine, especially within the same brokerage firm.
When you say "adjust" do you mean that they will recalculate your income as though you had not made the transfer. Crossing my fingers and hoping that is what you meant.</p>
<p>Yes, that is what Berkeley told me, maybe call your school and ask?</p>