cashed out 401k in 2009; check went into Roth IRA in 2010
I cashed out my 401k in 2009. The check was deposited into my Roth IRA in 2010.
Do I report the income in 2009 or 2010?
Thanks.
I cashed out my 401k in 2009. The check was deposited into my Roth IRA in 2010.
Do I report the income in 2009 or 2010?
Thanks.
Permalink Submitted by Kevin Sullivan on Thu, 2010-04-08 19:31
Income recognized in 2009, you should have received a 1099…..
Permalink Submitted by Robert Wright on Thu, 2010-04-08 19:42
Thanks Kevin.
Permalink Submitted by Alan Spross on Fri, 2010-04-09 00:26
I agree.
You also probably have a 20% withholding on the distribution, which will be included on your 1099R, but if you did not make up those funds in the rollover, it will incur a 10% penalty unless you were 59.5 at the time of distribution. You also had only 60 days to contribute the funds to a Roth IRA.
Also, if this is your first Roth IRA, your holding period starts in 2010, not 2009 even though the conversion is taxable in 2009. And since it was taxable in 2009, you also have the 100,000 limit that applies for 2009 conversions. The 5 year conversion holding period starts in 2010 since the Roth was not funded until 2010.