September 27, 2022
Is My Roth IRA Conversion Subject to the 10% Early Distribution Penalty?
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Is My Roth IRA Conversion Subject to the 10% Early Distribution Penalty?
I converted $50,000 from my Traditional IRA to my Roth IRA a few weeks ago. I was exactly age 59 at the time. I know that I will need to pay income taxes on the amount. But I am receiving conflicting information about whether I will owe the IRS a 10% early distribution penalty on the $50,000. Will I owe the IRS a penalty because I was under age 59 ½ when I did the conversion?
No. A Roth IRA conversion is a two-part transaction- a distribution and rollover to the Roth IRA as a conversion. If a distribution occurs before the IRA owner reaches age 59 ½, the distribution amount is subject to a 10% early distribution penalty, unless an exception applies. One of the exceptions is amounts converted to a Roth IRA. As such, you do not owe the 10% early distribution penalty on your Roth conversion amount.
