ROTH withdrawals
Get client who did $40k Roth conversion and split over 2 years. Shortly after the conversion he took out $7,500 and wants to know if that amount will be added to the split amount this year and said no, is that correct?
Get client who did $40k Roth conversion and split over 2 years. Shortly after the conversion he took out $7,500 and wants to know if that amount will be added to the split amount this year and said no, is that correct?
Permalink Submitted by Alan Spross on Wed, 2011-12-21 23:23
Sounds like the conversion was in 2010, and the distribution in 2011.
If so, the 7,500 is added to the 20k that would have been taxable in 2011.
Therefore, Form 8606 will result in his reporting 27,500 taxable in 2011 and 12,500 in 2012.
By taking the distribution, 7,500 was moved forward from 2012 to the 2011 return.
In the event he took out the 7,500 in 2010 instead of this year, then he would report 7,500 in 2010, 20k in 2011 and 12,500 in 2012.