Hello,

Someone does a coronavirus related distribution of 100k from 401k with 20% withholding. Three months later he rolls 80k to traditional IRA per Cares Act. Now he is looking at a Roth conversion of the 80k sitting in his traditional IRA and will waive withholding on conversion since IRS has 20k from initial CRD of 100k. Will he still owe 10% penalty on taxes due from 80k conversion since he is under 59.5? I’m thinking since the IRS already has the 20k withholding from initial CRD it’s like he is using non IRA funds to pay the conversion tax under 59.5 years old.

Thanks!