Roth Conversion
Client is self-employed, working part time and did a Roth conversion, can she spread the taxes over three years vs. this tax year and if so when does she have to make that decision?
Client is self-employed, working part time and did a Roth conversion, can she spread the taxes over three years vs. this tax year and if so when does she have to make that decision?
Permalink Submitted by Alan - IRA critic on Fri, 2020-09-04 16:03
With an ordinary conversion, the taxes are all due for the conversion year. Now, if the client qualifies for a CRD (100k max), it appears that the CRD distribution cannot be converted since recent IRS Notice 2020-50 clearly states that a CRD can only be returned to an account as a tax free rollover. Conversions are not tax free. If client does qualify for a CRD and the CRD is repaid to a non eligible plan since a conversion is not a tax free rollover, they will have to wait for IRS guidance. Either they have an excess regular Roth contribution that must be removed, or more liklely she cannot report the distribution as a CRD, just an ordinary conversion with all taxes due in 2020.