Question

I am converting money from my 401K to my ROTH IRA. How much money should I have withheld for taxes?

Forum|Forum|6 years ago
September 18, 2019
2 replies
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TurboTax Premier Online

Employee

That depends on what your marginal tax rate (including the 401(k) distribution) will be. The mandatory 401(k) Federal withholding is 20%. If you expect to be in a higher tax bracket then withhold more. Also figure state tax if any for state withholding.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

S

SweetieJean

Employee

Assuming it's Traditional (not Roth) 401(k), that depends upon your marginal tax rate. Also note that any increase in income can make (for example) more of your Social Security income taxable, affect Medicare premiums two years down the road, lower or eliminate some deductions/credits, etc. Try using this tool for estimating:

https://turbotax.intuit.com/tax-tools/calculators/taxcaster

And remember State taxes.

Critter

Employee

If this is a 401K conversion to a ROTH then you should have NOTHING withheld...instead you should pay in from withholding some other place OR make an estimated payment.

If you have withholding from the conversion not all will be sent to the ROTH & the portion withheld will become a taxable distribution. Not the best choice.

macuser_22

Employee

@Critter wrote:

If this is a 401K conversion to a ROTH then you should have NOTHING withheld...instead you should pay in from withholding some other place OR make an estimated payment.

If you have withholding from the conversion not all will be sent to the ROTH & the portion withheld will become a taxable distribution. Not the best choice.

True, but whatever the source of the money to pay the tax it will be from after-tax money that you already paid tax on.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**