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?



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).



Add new comment

Log in or register to post comments