26 Mar Can I pay tax on Roth IRA conversions using other funds?
Q. I have been making small conversions from my traditional and rollover IRAs to a Roth IRA for years. Is it allowable to pay the accompanying tax due from funds that come from elsewhere rather than using IRA funds?
A. Yours is a common question from people who do Roth IRA conversions.
Many people don’t even consider using funds from outside the IRA.
But it is allowable, and it’s usually a good idea, to pay the tax associated with a Roth conversion from non-IRA funds, said Ken Van Leeuwen, a certified financial planner with Van Leeuwen & Company in Princeton.
He said it is not a requirement to withhold taxes for a Roth conversion.
“The taxes that would be owed on traditional IRA withdrawals, or a Roth IRA conversion, can be paid when you file your tax return for that year,” he said. “Just as you would pay any other income tax that you owe, the tax associated with Roth IRS conversion can be paid using any funds such as those from a checking or savings account.”
Good luck with your continued conversions.
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This story was originally published on March 26, 2021.
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