topic 401k conversion to a Roth IRA in Retirement tax questions

401k conversion to a Roth IRA

Dr Rich — Wed, 23 Jun 2021 01:23:27 GMT

I am converting a rollover IRA (originally from a 401k) to a Roth IRA in June 2020. I know this is a taxable event and I want to pay the taxes from other funds rather than withholding from the rollover funds. Do I pay these quarterly as estimated tax or a single payment due immediately or a single payment in April of 2022?

Re: 401k conversion to a Roth IRA

macuser_22 — Wed, 23 Jun 2021 01:56:50 GMT

Either way. Either make quarterly payments that will not be questioned or a lump sum payment in the quarter that the conversion took place and then enter it on a 2210 form for uneven income. (The IRS has no way to know when the conversion took place, the 5498 an d 1099-R form issued by the financial institution only shows the conversion and not the date of conversion.)

Re: 401k conversion to a Roth IRA

Dr Rich — Wed, 23 Jun 2021 14:19:19 GMT

Thanks. Very helpful.

Re: 401k conversion to a Roth IRA

Opus 17 — Wed, 23 Jun 2021 18:33:13 GMT

You must make some kind of estimated payment. If you wait until April 2022 (the third option you mention), you will definitely owe underpayment penalties even if you pay in full at that time.

The only real question is, do you want to pay a lump sum in the quarter you make the conversion (payment due Sept 15, 2021 for income paid during June-August), or do you want to make equal payments (due May 17, June 15, Sept 15 and January 15, 2022). Since you already missed the first two estimated payment dates, you are probably best to pay it all by September 15 and use form 2210.