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03-17-2023, 08:28 AM | #13366 |
Supporter
Join Date: Apr 2007
Location: Scott City KS
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Because you'll pay a penalty.
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Posts: 57,822
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03-17-2023, 08:30 AM | #13367 |
Supporter
Join Date: Feb 2005
Location: Olathe, Ks
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Posts: 129,572
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03-17-2023, 08:35 AM | #13368 |
Supporter
Join Date: Apr 2007
Location: Scott City KS
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Posts: 57,822
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03-17-2023, 08:37 AM | #13369 | |
Supporter
Join Date: Feb 2005
Location: Olathe, Ks
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Quote:
What am I missing? |
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Posts: 129,572
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03-17-2023, 08:39 AM | #13370 |
Supporter
Join Date: Apr 2007
Location: Scott City KS
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It won't be a penalty for pulling out of a 401K. The income will be taxable with no withholding against it. Accordingly, he will potentially have exposure to an underpayment penalty.
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Posts: 57,822
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03-17-2023, 08:42 AM | #13371 | |
Supporter
Join Date: Feb 2005
Location: Olathe, Ks
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Quote:
Rolls over to Roth Claims on tax returns Tax return says you now owe $X Pays tax bill for $X Paying estimated taxes is just that, estimated. At the end of the day you have until April 15th of whatever year to true up what you owe or don't owe. So why not leave the money he is going to pay the tax bill with in an account earning 4% for the year and then pay when he has too? No one is going to come knocking on his door for any tax payment until April 16th, 2024. |
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Posts: 129,572
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03-17-2023, 08:46 AM | #13372 | |
fides quaerens intellectum
Join Date: Oct 2003
Location: United States
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Quote:
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Posts: 15,986
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03-17-2023, 08:49 AM | #13373 |
Supporter
Join Date: Feb 2005
Location: Olathe, Ks
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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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Posts: 129,572
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03-17-2023, 08:55 AM | #13374 | |
fides quaerens intellectum
Join Date: Oct 2003
Location: United States
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Quote:
Last edited by Jenson71; 03-17-2023 at 09:00 AM.. |
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Posts: 15,986
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03-17-2023, 12:30 PM | #13375 | |
Starter
Join Date: May 2022
Location: Butler County Kansas
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Quote:
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Posts: 393
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03-18-2023, 07:38 AM | #13376 | |
Supporter
Join Date: Apr 2007
Location: Scott City KS
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Quote:
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. |
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03-21-2023, 07:26 AM | #13377 | |
Mod Team
Join Date: Sep 2011
Location: Valley of the hot as ****
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Quote:
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03-21-2023, 08:35 AM | #13378 |
Seize life. Be an ermine.
Join Date: Jul 2001
Location: My house
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Posts: 142,930
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03-21-2023, 01:31 PM | #13379 | |
Politically Incorrect
Join Date: Feb 2009
Location: Scottsdale, AZ
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Quote:
Better check with accountant. |
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Posts: 52,379
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03-21-2023, 03:43 PM | #13380 |
Supporter
Join Date: Apr 2007
Location: Scott City KS
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Posts: 57,822
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