So, I did the brave/stupid thing: I asked my bank to move $10,000 (not real number) from my IRA to a newly opened RothIRA account and I certified to them I will be paying for the withholding. I sent the money (more than 20% of it, $2000) to IRS subsequently as part of next quarterly estimated tax payment. I assume at years end, my bank will be sending me a 1099R to have this all settled. Is that correct? (I am so confused)
So, did I converted $10,000 or $10,000+fee+taxes?
@Charlie Mak - you converted what you instructed the Bank to convert - the $10,000 per your post.
then you paid the tax to the IRS OUTSIDE the IRA with after tax money. this is NOT part of the IRA conversion.
You will receive a 1099-R for the $10,000 from the Bank in early 2024. That has to get reported on your tax return.
You will also want to report the estimated payment of $2,000 on your tax return.
it's rather simple
If your bank charged you a fee of , say, $50. You may find only $9,950 in your Roth IRA.
it depends on how the bank sets its fees.
In that case, if you don't put $50 into your Roth within sixty days,
you may have an early withdrawal of $50 from your Traditional IRA which is penalized.
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The smart thing to do is put your Roth into a self-directed brokerage Roth IRA, where you can make the investment decisions with most flexibility.