TomD8
Level 15

Retirement tax questions

If you used the funds from the conversion to pay the taxes, then you didn't "add the $200."  In effect, you converted $1800 and took out $200 to pay the tax. That's why the actual deposit to your Roth was only $1800.

If you had converted the entire $2,000 and paid the $200 tax bill with outside funds, that would be "adding" the $200.

If you're under 59 1/2, you'll incur the 10% withdrawal penalty on the $200 you didn't convert.

This is a good example of why it's better to avoid using the funds from a Roth conversion to pay the tax on the conversion. 

**Answers are correct to the best of my ability but do not constitute tax or legal advice.

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