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Retirement tax questions
Yes, the funds leaving your Traditional IRA are a distribution. When they are properly converted to your Roth account, they are a conversion.
That makes the distribution taxable, but not subject to a penalty.
The five-year rule doesn't apply since you didn't take a distribution from your Roth.
The purpose of Form 8606 is to let the IRS know what occurred with this distribution, which is that it's a conversion.
Don't worry, the IRS will understand this.
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March 20, 2024
8:37 AM
1,891 Views