Roth Conversion Question
Hello,
I have a client has a Traditional IRA at a mutual fund company. They want to take a distribution and roll the funds into a Roth IRA into a different custodian and claim it as a Roth conversion. I know this can be done. However….if the transaction crosses tax years and the 1099-R for the distribution is issued in 2023, but the 5498 for the Roth deposit isn’t issued until 2024, what year would the client reconcile the taxes on the Roth conversion? 2023 or 2024?
Thank you.
Permalink Submitted by Alan - IRA critic on Wed, 2023-12-27 19:32
2023, However, the 5 year conversion holding period will not start until 1/1/2024. The IRS will have to match up the 1099R and 5498, even though they will be issued a year apart.