roth

[Timbo99]

I am 75. I rolled over my 401k's to a rollover IRA many years ago. Now I want to transfer $50k from my Schwab IRA to my Schwab Roth IRA. I do not want to have the tax withheld. I assume I can pay the tax later with the quarterly payments. I also took my RMD of $12,450 back in March, 2023. I believe I report this on form 8606.

Is this correct. ?

[dmertz · Accepted solution]

Correct.  If you want the $50k Roth conversion to be 2023 income, the distribution from the traditional IRA must be made no later than December 31, 2023 and will be reportable on your 2023 Form 8606 Part II (along with Form 1040 line 4).

If you want to do a Roth conversion in 2024, you'll similarly have to complete your 2024 IRA RMD first before converting any  other traditional IRA amounts to Roth.

[Opus 17]

Be aware that for a lump sum of income paid to you in December 2023, an estimated payment would be due January 15, 2024, unless you file your final return by January 31 and include full payment.  Also, the IRS assumes that income is earned evenly over the year and that tax payments should also be evenly spread out.  So even though a lump sum income is paid in December, the IRS will expect to see estimated tax payments in April 2023, June 2023, September 2023, and then the last payment in January 2024.  You can mitigate this on your tax return by including form 2210 (the penalty calculation) and using the "annualized" method, which shows the IRS the quarterly breakdown of your income and that the tax for each quarter was appropriate at the time.