I'm taking about half of my traditional IRA and moving it to a ROTH. I already have the ROTH open and it only has $300 in it, uninvested. I just dumped some stock in my traditional and combined can make the purchase I want. I'm not interested in moving all of my traditional over to the ROTH, but I don't see us ever putting more money into it.
ShareBuilder is asking about tax withholding. WWMMD?
FWIW this year is going to be unpredictable for us-DH just got a new PT job and we withheld extra on Federal because he won't hit the threshold to have taxes taken out on each check. I'm still predicting a <$4k federal refund, owing <$1k on state. I need to adjust my state withholding on my PT job since I never have any taken out. I'm transferring about $6k. We're solidly in the 25% bracket. Our state has a flat tax rate at 5.75%.
Post by delawarejen on May 21, 2015 10:46:59 GMT -5
I wouldn't bother on withholding federal since you're expecting a refund anyway. As for state, I would just adjust your withholdings at work enough to cover it.
I wouldn't bother on withholding feferal since you're expecting a refund anyway. As for state, I would just adjust your withholdings at work enough to cover it.
That's what I was thinking-thanks. These PT jobs are fun but man do they mess things up
I'm nothing close to a tax expert but i think i remember from somewhere that withholding the funds for taxes from your ira during conversion is considered a distributed and you'd be socked with penalties for that? I may be completely talking out of my ass with that, but i'd talk to a tax person first.
If I remember correctly no, as long as you deposit it within 60 days to the ROTH account.
I'm nothing close to a tax expert but i think i remember from somewhere that withholding the funds for taxes from your ira during conversion is considered a distributed and you'd be socked with penalties for that? I may be completely talking out of my ass with that, but i'd talk to a tax person first.
To my knowledge this is correct. It's been years since I studied this though.
We always have our clients mark no w/h on these forms.
If I remember correctly no, as long as you deposit it within 60 days to the ROTH account.
I may not be understanding, so i'm sorry if i am, but the tax amount is a "distribution." So say you want to convert $100,000. You have them withhold $30,000 and send it to the irs to pay taxes and $70,000 goes to the Roth (is this the 60-day part you mean?). I think i'm remembering that the $30,000 is a distribution and there's some sort of penalty (10 percent??) on it unless you are exempt for some reason (like age).
This explains it well. As long as it is deposited within the 60 day time frame it is looked at as a qualified distribution and therefore exempt from the 10% early withdrawal penalty.
I think I may understand now what you are talking about If you select the box that set the side money for taxes it is like paying a tax bill in advance. You don't get penalized for setting aside the money to pay your taxes
I may not be understanding, so i'm sorry if i am, but the tax amount is a "distribution." So say you want to convert $100,000. You have them withhold $30,000 and send it to the irs to pay taxes and $70,000 goes to the Roth (is this the 60-day part you mean?). I think i'm remembering that the $30,000 is a distribution and there's some sort of penalty (10 percent??) on it unless you are exempt for some reason (like age).
This explains it well. As long as it is deposited within the 60 day time frame it is looked at as a qualified distribution and therefore exempt from the 10% early withdrawal penalty.
Is this article correct, that you can't convert a traditional IRA to Roth if your AGI is $100,000+?
I may not be understanding, so i'm sorry if i am, but the tax amount is a "distribution." So say you want to convert $100,000. You have them withhold $30,000 and send it to the irs to pay taxes and $70,000 goes to the Roth (is this the 60-day part you mean?). I think i'm remembering that the $30,000 is a distribution and there's some sort of penalty (10 percent??) on it unless you are exempt for some reason (like age).
This explains it well. As long as it is deposited within the 60 day time frame it is looked at as a qualified distribution and therefore exempt from the 10% early withdrawal penalty.
But the portion withheld for taxes should still be subject to the withdrawal penalty and taxes since it is not converted. The withholding is a distribution.
This explains it well. As long as it is deposited within the 60 day time frame it is looked at as a qualified distribution and therefore exempt from the 10% early withdrawal penalty.
Is this article correct, that you can't convert a traditional IRA to Roth if your AGI is $100,000+?
This article is old. The AGI limitation was lifted a few years ago.