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Level 1
May 16, 2021
Question

Rollover versus a distribution

  • May 16, 2021
  • 2 replies
  • 22 views

Every year I have been moving 10 to 15k Traditional IRA money to Roth because I would watch the refund meter go down as I entered the distribution then go back up when I confirmed that money went to an IRA.  This year seems the opposite effect and I don't understand why.  Any ideas?

 

IE: if I take the distribution and don't put it in a Roth my refund goes up?

2 replies

macuser_22
Alumni - Champ
Alumni - Champ
May 16, 2021

A rollover is moving money money from a before-tax account to another before that account such as one Traditional IRA to another Traditional IRA. 

 

If the money is moved from a before-tax account (like a Traditional IRA) to an after-tax account (such as  Roth IRA) then that is a conversion and the tax must be paid.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
Mike9241
Level 15
Level 15
May 16, 2021

or did you do a back-door ROTH conversion.  contribute to IRA as nondeductible.  then move the money from the IRA to a Roth. 

Mike9241