Distribution from a Traditional IRA to a Roth

[annbossojohnson]

Hello everyone-

A client moved money from a traditional IRA to a Roth in November of 2022.  There is a tax liability from this conversion.  ProConnect is not calculating any tax penalty; would there be a penalty on this? And if yes, can someone help with how I show in ProConnect what the penalty would be?

Thank you-

Ann  

[qbteachmt]

You called it "distribution" but you describe a conversion that was either a trustee-to-trustee conversion, or your taxpayer had possession of the money in between the two accounts and the deposit into a Roth meets the rollover requirements. If it doesn't qualify as a rollover or a conversion, then it would also not be qualified for Roth, so you simply have to know the details. There would not be a penalty. There would be taxes. If the person held onto the money in between, then the "distribution" would have been subject to required withholding, so now you have to confirm if they rolled Gross or Net, as well.

Get the details and compare that to the provisions.

[annbossojohnson]

Thank you for the quick response-

Straight conversion from traditional to roth; rolled the entire amount directly to the Roth account no distributions were taken.  Did not explain that correctly.

So, then only the tax due generated from the conversion and no penalty, correct?

[qbteachmt]

So far, you didn't list anything that would be penalized.