Roth Conversion | Ed Slott and Company, LLC

Roth Conversion

If you take a distribution from an IRA, and you're over 59 1/2, and you withhold Federal Taxes from the distribution, can you still do a Roth Conversion based upon the Gross amount vs. Net?

Example: $50,000 gross distibution from IRA. 20% Federal tax and state tax is not an issue, IRA holder gets a net check from $40,000. Can you they do a conversion based upon the $50,000?

Any feedback would be great. Thank you.

Yes, you can replace the 10,000 using your other money. You would do an additional conversion of 10,000 to bring the total conversions to 50,000 reportable on Form 8606.  This would have to be done within 60 days of the distribution. You would be taxed on 50,000 either with or without the second conversion.

 

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