@fanfare wrote:
"When you do the rollover, try to have the taxes withheld by the broker instead of making a separate payment."
If you do this, you are impairing your Roth conversion, the funds go to the IRS instead of the Roth IRA.
Meanwhile, the entire distribution is taxable.
@Opus 17
The entire distribution is taxable no matter what.
Assuming that when you convert (let's say) $10,000, you also have $2200 from another source to pay the tax, then you can make an estimated payment from that source instead of withholding. But then you must use schedule AI on form 2210 to avoid a penalty.
Of course, you could also have the $2200 withheld from the distribution, then pay $2200 from your other funds into the Roth IRA as an indirect rollover within. That accomplishes the tax deferred savings AND having withholding to avoid a penalty. But you can only do that kind of rollover once per year.
