@timw657 wrote:
I want to thank you for that explanation but admit I still find that an odd technicality and cannot understand the difference. This problem is probably not understood by thousands of people. Clearly not specifying that a Roth is not allowed, why then does the IRS have the right to declare whether I put the money in the bank or do something else with it like convert to a Roth? Do you actually mean it is not my business to do what I want with the distribution? I thought it was my money, and could convert it if I wanted. I absolutely do not wish to break the law. But I find it so difficult that this matter is not addressed in a more direct answer, such as specifying clearly that a Roth conversion is not allowed, in plain English for everyone to understand and then comply with the rules. Thanks for your reply.
The IRS does not make the rules, Congress does. The plain reading of the CARES act that Congress passed to put money into peoples pockets because they took a distribution because of COVID (such as loss of job, unable to work, etc) so they could pay their bills allows people to return the money tax free when they recover, to the same or similar account that it was taken from or to pay the tax over a 3 year period because of hardship.
It was not meant to be a "backdoor" method of making taxable Roth conversions over a 3 year period - that is contrary to the purpose of the act.
Do it if you want and let us know if the IRS disallows it.
**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.**
