ThomasM125
Expert Alumni

Get your taxes done using TurboTax

It is true you can take a distribution from the retirement account in 2023 and treated it as a distribution in 2023, so it won't be taxable on your 2022 tax return. Assuming you can make a deductible IRA contibution for 2022, you can do that by April 18, 2023 and that will provide a deduction on your 2022 tax return. If you then move that money to a ROTH IRA account, you will have another distribution that is taxable in the year you do that.

 

In 2023, you will have to pay tax on the distribution from your retirement account and a penalty if the distribution was an early distribution.

 

So, at best you will be creating a timing difference between when you pay tax on the distribution, you will not be coming out ahead from a tax standpoint over the next couple of years, but your money will grow tax free in the ROTH IRA account so there are long-term benefits to doing the ROTH IRA conversion.

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