Traditional IRA Conversion to Roth

[S T]

Question,
T/P took Traditional IRA in around 2011-2012 (don't remember the exact time frame) and converted to Roth IRA, paid the tax spread out over the 2 year period for the conversion.

In 2014 made a distribution from the Roth Ira, t/p is under age 59.5 - 1099R is coded J -no known exception. showing taxable amount. Seems like if the t/p rolled the amount from a Traditional IRA to a Roth IRA and paid tax, the amount in 2014 would not be subject to tax, - maybe the 10-% penalty only on the amount

Is the distribution subject to taxation again, is the distribution subject to 10% penalty due to under 59.5 and not reaching the 5year holding.

I am having a difficult time with the 1099R and code J, on a conversion.

Thanks

Sandy

[Lion]

I think, think, that due to 5 years not being met that her principal amount can come out tax free (already paid tax at the conversion) and only any earnings are taxed. Plus, the 10% penalty applies to the taxable part only. But, I'm working from memory here, and I don't have much left.

[Roland Slugg]

Lion is correct. You may wish to consult IRS Pub 590-B which explains this very well and even has a nice flow-chart.

[S T]

Thank you, that was my thought no tax on the conversion amount , just having some difficulty with the 1099R reporting, and entering into the software. Use 8606 form and then the 5329 for the 10% penalty on earnings, if any?

Sandy