Frequently asked questions

Converting a Traditional IRA to a Roth IRA

 

Why should I convert a Traditional IRA to a Roth IRA?

The money you save in a Roth IRA has already been taxed, while the money you put into a Traditional IRA has not been taxed. With a Roth IRA, after the age of 59 ½ you can start taking money out without paying taxes on it. But with a Traditional IRA, you’ll pay taxes on the money you withdraw after 59 ½.

You will pay some taxes when you convert from a Traditional to a Roth IRA, but in most cases, the interest earnings will offset those costs.

How do I convert a Traditional IRA to a Roth IRA?

We’re happy to help you convert your Traditional IRA to a Roth IRA. Before we get started, it’s important to understand conversion taxes.

Conversion taxes: When you convert your Traditional IRA to a Roth IRA, you will pay taxes on any untaxed amounts in the Traditional IRA. Although paying taxes now might hurt, it will save you from paying taxes on additional interest earnings when you retire.

Here are your three options for converting a Traditional IRA to a Roth IRA:

  • 60-Day Rollover: Ask the financial institution holding your Traditional IRA to transfer money to you in the form of a check or wire transfer. You must deposit the funds into a Roth IRA within 60 days, or you will be subject to a distribution penalty.  
  • Trustee-to-trustee transfer: If you’re opening a Roth IRA at a financial institution that differs from the one that holds your Traditional IRA, ask the trustee of your Traditional IRA to transfer money to the trustee of your Roth IRA at the new financial institution.
  • Same trustee transfer: If your Traditional and Roth IRAs are held by the same financial institution, your trustee can easily transfer money to your new Roth IRA account.

Need help converting your IRA?

We’re here for you. Speak with a banker at a BBVA Compass branch near you or contact one of our customer service representatives by phone.

Details you need to make a smart decision

All checking accounts, savings accounts, and Debit Cards are subject to approval, which may include credit approval. $25 minimum opening deposit required. Please refer to the Terms & Conditions for additional details. Additional terms and miscellaneous fees may apply. Products, features, and benefits offered with accounts are subject to change at any time. and benefits offered with accounts are subject to change at any time."