10% Penalty on Withholding
If person converts IRA with withholding prior to age 59.5 do they owe a 10% penalty on the amount removed from the IRA and sent to the government?
If person converts IRA with withholding prior to age 59.5 do they owe a 10% penalty on the amount removed from the IRA and sent to the government?
Permalink Submitted by Alan - IRA critic on Wed, 2018-03-21 18:53
Technically yes. But if the custodian reports the distribution on a single 1099R, Box 7 will probably not show Code 1 (early dist). The custodian should really issue one 1099R to report the amount converted (Code 2) and another to report the withholding (Code 1).