topic Re: Rollover to Roth conversion in Retirement tax questions

Rollover to Roth conversion

afjett1 — Tue, 11 Mar 2025 16:39:33 GMT

I rolled over a traditional IRA into a Roth IRA. My financial consultant recommended rolling over only a portion of the account and withholding some funds to cover taxes immediately, instead of rolling over the entire balance. As a result, I received two 1099-R forms. One reports the larger amount rolled over to the Roth IRA with distribution code 2, while the other shows the amount withheld for taxes, with distribution code 1, which typically signifies an early distribution. My question is: will I incur any penalties or higher taxes on the portion withheld for taxes? Thanks

Re: Rollover to Roth conversion

DavidD66 — Tue, 11 Mar 2025 16:47:03 GMT

Yes, if you were under age 59 1/2, the distribution that was not rolled over into a Roth IRA is both taxable and subject to a 10% penalty for early withdrawal.

Re: Rollover to Roth conversion

afjett1 — Fri, 14 Mar 2025 14:01:04 GMT

Thank you so much for the answer. I have a follow up question. Because I did the rollover, my income was higher than expected and I will have to pay back some of the advance premium tax credits that I received for Marketplace insurance. Is there a Marketplace calculator (like the W-4 calculator) or an income table that can help me determine what I should pay for Marketplace, so that I can avoid this in the future? Thank you.

Re: Rollover to Roth conversion

KrisD15 — Fri, 14 Mar 2025 14:11:16 GMT

HERE is a link to an IRS Calculator which might be helpful

Re: Rollover to Roth conversion

afjett1 — Fri, 14 Mar 2025 14:18:01 GMT

Thank you!