60 day rollover

[Sadiestevie]

I took money ($500k) out of a traditional ira ($100k taxes withheld) in order to buy a house. When my old house sold, I wanted to take the proceeds to roll the money into a Roth IRA within the 60 day time limit. I am confused if I have to put the full amount ($500k pre-tax) into the Roth or just the after-tax amount ($400k) to avoid any penalties. Does anybody know?

[MindyB]

$500,000. Even though you only physically received $400,000, the IRS considers the $100,000 withheld for taxes to be part of your distribution. If you only deposit $400,000, the IRS will treat the remaining $100,000 as a permanent withdrawal. You'll be able to get the $100,000 back as a tax refund (assuming you were not underpaid for unrelated income).