IRA Rollover to Roth — Tax Withholding
I have an IRA with Vanguard. I plan to Convert $100,000.00 to a Roth IRA. I understand Vanguard will withhold 20% in taxes. I have other investments wit h them as well. My question is if I owe more that $1,000.00 in taxes at the end of the current tax year. Will I incur a penalty to the Government due to t he IRA Conversion?
Terry Says
You should consult with your tax preparer. An unexpected windfall should be covered by withholding. And if you have paid in 100% of your LAST year’s tax liability (likely because of the withholding) or at least 90% of your tax liabiity for the current year, then you wouldn’t be subject to a penalty if you owe money next April when calculating your taxes.
