2404521
When moving a security from a traditional IRA to a Roth IRA within the same institution, how is it taxed? Is there a penalty when under age 59-1/2?
In other words, is it taxed as income? Or is it taxed as capital gain based on purchase value and value at transfer?
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The transfer from a Traditional IRA to a Roth IRA is called a Roth conversion which is taxable as ordinary income. The taxable amount is the entire amount of the conversion. There is no penalty for the conversion even if you are aged under 59 1/2.
Please read this IRS document, especially the section on How do I convert my traditional IRA to a Roth IRA?
No penalty but the entire amount will be taxed at your normal income tax rate.
The transfer from a Traditional IRA to a Roth IRA is called a Roth conversion which is taxable as ordinary income. The taxable amount is the entire amount of the conversion. There is no penalty for the conversion even if you are aged under 59 1/2.
Please read this IRS document, especially the section on How do I convert my traditional IRA to a Roth IRA?
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