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taxes paid on Roth rollover from IRA

I paid the taxes out of my IRA, from cash in the account,  I am assuming I need to use  (the whole amount as the rollover amount)that was withdrawn from the IRA. Am I correct? Taxes plus contribution to Roth?

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2 Replies
SamS1
Expert Alumni

taxes paid on Roth rollover from IRA

You should receive a 1099R from the financial institution that holds your IRA indicating how much is taxable.  Since you are rolling from a tax deferred IRA to an after-tax Roth IRA, all of the distribution will be taxable.  If you have not received your 1099R yet, you need to contact your IRA holder and find out where it is. The 1099Rs are suppose to be mailed by 1/31.  

 

Once you receive it, you will need to enter the information in TurboTax.  Indicate you rolled the amount to another retirement account then answers the questions from there.

TomD8
Level 15

taxes paid on Roth rollover from IRA

Here's an example illustrating how it works:

 

If you convert $50,000 to a Roth IRA and elect to have 20% withheld for taxes, your conversion results in only $40,000 going to the Roth.   The other $10,000 goes straight to the IRS.  The $10,000 never gets converted and is technically a withdrawal prior to the conversion.  If you are under 59 1/2 and no exception applies, there is a 10% early withdrawal penalty on the money that was sent to the IRS.  In addition, the entire $50,000 counts as ordinary income for the year.

**Answers are correct to the best of my ability but do not constitute tax or legal advice.
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