60-Day Rollover Roth Conversion

Submitted by Frederick Boucher on Thu, 2024-02-08 20:31

On December 30, 2023 client distributed $30,000 from Traditional IRA. Within the 60-Day rollover window we can:

– Keep the $30,000 and it will be taxable in 2023
– Roll it to a Traditional IRA within 60 days and it is non-taxable
– Roll into a Roth IRA within 60 days as part of a conversion

Can we complete a partial Rollover/Conversion? Essentially, can we rollover $20,000 to a Traditional IRA (no tax consequences) and rollover $10,000 to Roth IRA as a conversion (taxed in 2023)? If yes, how would the tax forms be issued to represent this transaction?



Submitted by Alan - IRA critic on Thu, 2024-02-08 20:57

  • Yes, client has plenty of flexibility within the 60 day rollover period, and can split the 30k between destination accounts. If under 59.5 and amount not rolled over will be taxable and subject to penalty.
  • Any rollover to a TIRA is subject to the one rollover limit over a 12 month period. Therefore, if client has used up the only rollover permitted in the 12 months prior to 12/30/2023, none of the funds can be rolled to a TIRA, they must be either kept or converted to Roth, as conversions are not subject to the rollover limit.
  • Any amount converted would be reported on a 2023 8606, and all amounts distributed will be reported on Form 1040, lines 4a and 4b (taxable amount), with “rollover” entered next to 4b for any amounts rolled back into a TIRA.
  • Client should have received the 1099R for 2023 by now, and is in a position to determine how much of the 30k will be included in 2023 taxable income by the IRA type receiving the rollovers.

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