Thank you for the correction and explanation. Much appreciated.$100k was distributed from a traditional IRA. Within 60 days, $100k was contributed to a Roth IRA. That is practically the definition of a $100k conversion. What you did with your money in between those two events is irrelevant. Go out to dinner, stuff some of it under your mattress, direct some to the IRS for withholding... none of that matters.
The 80k that made it into the Roth was a conversion, but adding to the Roth the 20k that was withheld for taxes would be an indirect rollover. It's the indirect rollover that must done within 60 days and is limited to once every 365 days.
I understand the intuition motivating what you're saying -- that a dollar sent to the IRS is somehow no longer available to you to be part of the conversion -- but the tax code doesn't view it that way.
Thank you for the link.You are correct in the process and timing. But not about the once per 365 days limit. This is discussed in this irs.gov link under the exceptions.
I assume that this would also apply if someone did a conversion with withholding prior to age 59.5. Normally the taxes withheld would be considered a standard withdrawal subject to a 10% penalty. Would a rollover with taxable cash to top off the Roth within 60 days negate the "withdrawal" and penalty? If so, then regardless of age one should be able to use this process if needed to hit a safe harbor (e.g., do a Roth conversion late in the year with close to 100% withholding sufficient to hit the safe harbor + the additional tax due on the conversion). Correct?
Statistics: Posted by Rocinante Rider — Fri Dec 26, 2025 7:04 am — Replies 18 — Views 1191