Roth conversion under 591/2
Client 50 years old has 401K ($200,000) from previous employer. She is looking to roll it over to IRA annuity and start partial roth ira conversions. If she converts $50,000 in year 1 and annuity company will withhold all aplicable taxes from $50K and pay it to IRS. Will the amount of taxes paid to IRS be subject to a 10% penalty? Is it consider withdraw or not?
Permalink Submitted by Alan - IRA critic on Tue, 2024-02-20 03:01
Yes, the withholding will be subject to the penalty. It is not recommended to withhold from a Roth conversion distribution at any time, but doubly so if the withholding is subject to the penalty as well as the tax. It is preferable to pay the taxes from other income or by quarterly estimates.
Permalink Submitted by Dora Wysocki on Wed, 2024-02-21 18:53
thanks – I thought so….