Quote:
Originally Posted by petegz28
I am not sure I agree with that. My Wife does IRA administration, I will hit her up on that but as far as I know, you have 60 days to get the money rolled over and any tax you owe can get paid when you file your taxes. Just like any other time your tax return says you owe. Maybe it's this 90% thing you are talking about....
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Dude.
It has nothing to do with the IRA. The IRA Conversion just creates income. Forget the IRA.
If you're single, but you mark down you're married and have 400 kids on your W-4 and you don't withhold enough, there will be an underpayment penalty.
I did a return that had a guy that got a bunch of ESPP stock that he sold, with the runup he had a pretty big gain. Him and his Wife both had W-2 earnings, with withholdings, but he was underwithheld because the stock sale had no withholdings. So he had an underpayment penalty.
But if you have a bunch of income that doesn't have withholding against it, you either need to make an estimate or pay an underpayment tax.
Seriously. Read the link I posted.