How do I not get penalized moving my Traditional IRA that had taxes withheld from the previous company to a Roth IRA?

[myron-jon]

I had a Simple IRA with a company who decided to no longer service me.  I went to another company who did not process the paperwork correctly so the first company withheld federal income tax.  I took that check and went to my Credit Union and made the deposit minus the withheld taxes.  I was told I would not get penalized because I put the whole amount into the Roth IRA.  I am using Turbo Tax and it states I am getting penalized.  How do I fix not getting penalized moving my Traditional IRA that had taxes withheld from the previous company to a Roth IRA with my Credit Union?

[SweetieJean]

Did you do so within 60 days?

[myron-jon]

I was working with Modern Woodmen and they messed up on filing the paperwork on time with Metropolitan Life Insurance so when I received the check from Metro, it had taxes withheld and I took that check right away to my Credit Union to open the Roth.

[SweetieJean · Accepted solution]

made the deposit minus the withheld taxes

told I would not get penalized because I put the whole amount 

But you didn't put the whole (gross) amount in. Thus, you are being penalized on the amount of the withheld taxes that you did not put into the Roth.  This catches a lot of folks by surprise.

[myron-jon]

So because Metropolitan Life Insurance withheld the taxes, I was supposed to cover that amount when I put it into my Roth IRA?  They are the ones that told me I would not get penalized if I just opened the Roth.