Rollover to ROTH IRA

[NotEasy]

Taxpayer is under 59.5 years old. In 2011, he rollovered the whole balance in his regular IRA to a ROTH IRA. I think the distribution amount is considered income but there should be no penalty.

In order to waive the penalty, I believe the taxpayer need to file Form 5329 and complete Part I. Does anyone know what the exception code is for no penalty due to rollover from traditional IRA to ROTH IRA?

[RitaB]

No penalty

No penalty. It's still a retirement account. The penalty is for early "withdrawal".

Yes on the tax.

[NotEasy]

No penalty. It's still a retirement account. The penalty is for early "withdrawal".

Yes on the tax.

Thank you Rita.

I think the taxpayer has to file Form 5329 to explain the exception so he does not have to pay the penalty. Do you know which exception code should be used. I have gone through the list and I could not find one that can be applied to a traditional IRA to ROTH IRA conversion. Thank you.

[RitaB]

Try

Thank you Rita.

I think the taxpayer has to file Form 5329 to explain the exception so he does not have to pay the penalty. Do you know which exception code should be used. I have gone through the list and I could not find one that can be applied to a traditional IRA to ROTH IRA conversion. Thank you.

Open a Form 8606, see Part II. May also have to use Code 12 on Form 5329. Sorry, not done one in a while.