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IRA to Roth IRA conversion, withdraw $20K and withhold $4K for federal tax. Is taxable amt $20K or $16K?
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June 4, 2019
3:07 PM
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Retirement tax questions
No, you'll be taxed on the $20,000, and the $4,000 you had withheld on that distribution will be used to pay your taxes on the distribution.
June 4, 2019
3:07 PM
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Retirement tax questions
If you are under age 59½, the amount not converted to Roth ($4,000) is also subject to an early-distribution penalty.
Roth conversions are most beneficial if you can pay the taxes with funds from another source since you end up with more in the Roth IRA to grow tax free.
Roth conversions are most beneficial if you can pay the taxes with funds from another source since you end up with more in the Roth IRA to grow tax free.
June 4, 2019
3:08 PM
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Retirement tax questions
Good point, I definitely don't want to incur the early-distribution penalty.
June 4, 2019
3:08 PM