Reply To: Withholding from Roth Conversion, Then Replacing w/h in TIRA

Home Fairmark Forum Retirement Savings and Benefits Withholding from Roth Conversion, Then Replacing w/h in TIRA Reply To: Withholding from Roth Conversion, Then Replacing w/h in TIRA

#3249
Alan S.
Participant

Yes, because you can replace withheld amounts using other funds, you can complete a rollover while increasing your withholding. I think some custodian’s withholding % is limited to 2 digits, so 99% WH would be max at those custodians.

While the 1099R will look like another other reported distribution with withholding, if you replace any of the withheld amount you are using up your one permitted rollover under the one rollover limit per 12 months, so this must be taken into consideration when deciding to do this. You would have to report the rollover on lines 4a and 4b of Form 1040 as usual, and if you are in an RMD year you would have to complete the RMD for that particular IRA account before you could roll any portion back to the IRA. In a non RMD year however you could have a 0 taxable distribution, but your withholding account is increased if you complete the rollover.