The scenario would go something like this:
On December 31st, I request a $24k rollover from a traditional IRA to a ROTH, and have 50% ($12k) withheld for taxes. So, the net rollover into the ROTH is $12k. On February 15th of the following year, I file my taxes and find that my ordinary income (ROTH $12k) results in taxable income of $0 due to the standard deduction and other offsets. There are no state income taxes and there is no other income.
My thinking is that the $12k in over withheld taxes would come back to me as a non-taxable federal income tax refund. If true, then essentially a $24k distribution from a traditional IRA was sheltered from federal income taxes.
Is this correct?
