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Retirement tax questions
It depends on the source of the IRA funds you recharacterized.
If you make IRA contributions and got a tax benefit (either on taxes as an IRA deduction or in pay as a 401(k) deduction later put into the IRA), you are in fact taking a distribution and the income is taxable but the penalty for early (e.g., under 59 1/2) is waived as you put them into a Roth.
If, however you just put money from a bank account into the IRA and moved it to the ROTH IRA, it should not be taxable since you funded with already taxed income.
‎January 17, 2024
2:47 PM