I think there is some confusion as to what the OP is talking about. From what I read, he is pushing the converter back into the pump and he has about 1/8" clearance. If this is the case then the clearance is fine and all he needs to do is pull it forward and bolt it to the flex plate.

The other problem that comes up that Airwoofer mentions is the converter will not pull up flush to the flex plate. This is most often the case with small race converters that use a GM front cover. The indentation around the center of the GM converter is a smaller diameter than the bolt circle of the flex plate to crankshaft bolts. The crank bolts hit the converter and prevent it from fully seating. In this case, if the converter can be pushed back into the pump(indicating there is clearance there) then you can simply use washers to take up the space when the converter is pulled forward again. Keep in mind you do not want to use spacers so large that you space the converter pilot too far back that it is no longer supporting the converter. If you cannot move the converter back into the pump, then you need to clearance the bolt heads or the converter to gain some clearance.