If I could speak with you directly, I could answer most if not all your questions. You need to speak with a custodian that will hold the accounts in trust. Choosing the right one is important as well. This depends on how much money and what you will be investing in, assuming you are going self-directed.

Your custodian is correct, the IRS has not been explicit with this. Currently, the only way to separate basis from before-tax contributions on a direct conversion is to actually take possession of the funds (to the extend of pre-tax contributions) and deal with the 20% withholding, then roll it over.

After that is done, you can do a direct conversion of what is left, the basis. This is because there is some guidance that suggests that actual distributions come out of pre-tax money first. Whether or not this will hold is still in question, but it is the only option that is actually defendable.

You would definitely want an accountant who understands these nuances and can properly document these steps when doing your tax return.

Hope that helps a bit.

Joe