I want to start my Roth IRA immediately and I wanted to verify what would be the best way to fund it.

1) One way I thought about was to take my mutual fund, PRWCX, and convert to a Roth IRA. I talked to the representative at T. Rowe Price and he mentioned that I would need to sell my shares in order to use that money for the Roth IRA. The only fee I would be concerned with is the capital gain tax.

2) The other way I could fund my Roth IRA is just straight from my salary.

Would I be saving more money by doing path 1 or path 2? For path 1, I believe capital gain tax is relatively steep even though I would contribute less per paycheck this year compared to path 2.

For path 2, I would have to contribute more per paycheck this year, but I believe the expense ratios on both the mutual fund and Roth IRA would be too miniscule to make a dent overall (about 0.74% for PRWCX)

Hope this makes sense. Let me know if I need to clarify anything. Thanks for the help in advance!

New to the forums, but I believe I have an idea:

First off, assuming from the idea about the mutual to ROTH conversion, I take it your money doesn't need to be that accessible for emergencies.

I would say
A) Transfer the mutual into a good looking Equity Indexed Annuity if you're looking for stability. and open a ROTH based on salary. Annuities are tax sheltered and you won't get the early tax hit. Equity Indexed Annuities take away all the scary losses from a mutual fund, but pay you the gains, the problem is they're only rated on a monthly, quarterly, or yearly basis depending on the product, and almost all of them have caps (some don't right now though!) this will take away some risk from that mutual if that's what you're worrying about, and will prolly make your money work hardest, while still taking away a bunch of risk if that's what you're worried about.

B) Keep the Mutual if it's doing well, and do a ROTH based on salary. A ROTH IRA dump usually isn't useful unless you're looking for an emergency payin. But once again, that depends on your age, income, and expenses, plus your personal plan for retirement.

im having the same problem

1) This makes no sense, you can't convert non-qualified assets to a Roth IRA. You can sell you mutual funds and then contribute your annual $5k to the Roth of course. You will pay capital gains taxes, or incur a loss.

The position of your capital assets as well as your ability to fund your employer plan through your salary will be most important in deciding which way to go.