IRA conversion to Roth in 2008
Planning to convert some traditional IRA to Roth in 2008. Income will be right at the 100k max for MAGI. Will need to pay tax with an additional distribution from the traditional IRA. If conversion is done late December, can the distribution be taken and tax paid with 4th quarter estimate in Jan of 2009, so as not to push income over the limit?
Permalink Submitted by Alan Spross on Thu, 2008-02-14 20:44
It is generally not a good idea to pay conversion taxes from IRA distributions prior to age 59.5 when the early withdrawal penalty ceases. But if you convert without withholding in 2008 and take a January, 2009 IRA distribution to pay the taxes, at least you will not be affecting your 2008 MAGI limit by the latter distribution. But you will be facing taxes and penalty for 2009. You probably know that the conversion itself is NOT counted in the MAGI 100,000 conversion limit.
Short answer to your question is “YES”.