tIRA Withdrawal to Roth From Taxable

[Trooper]

I withdrew money from my tIRA last month because I had some room in my 22% bracket, and for some anticipated spending needs in 2026. The funds are in my taxable brokerage account. That spending won't materialize, so I am wondering if I can move that money from my brokerage account to my Roth IRA in 2026. Essentially I would end up with a Roth conversion.

 

[RetiredHappy]

Looks like you can as long as it is within 60 days.

Roth IRA - Conversion From an IRA Distribution Must be by End of Tax Year

It's your money. Get it back for less.

www.taxact.com

 

[Koolau]

Yep - has to be within 60 days, I think.

 

[Trooper]

Just for clarification, I would like the taxable event to be in 2025. Do I still have 60 days to "recharacterize" the tIRA withdrawal to a tIRA > Roth conversion?

 

[RetiredHappy]

It is in the link. It will be treated as in 2025.

 

[SecondCor521]

Just for clarification, I would like the taxable event to be in 2025. Do I still have 60 days to "recharacterize" the tIRA withdrawal to a tIRA > Roth conversion?

As a side note, I would strongly suggest not using the word "recharacterize" in any conversations with your IRA custodian. That word refers to something quite different and you'll likely confuse them and risk errors if you use it.

What you are doing is an "indirect Roth conversion". The phrase "60 day rollover" would also be clear to them. Use both phrases and any competent IRA custodian should understand what you're doing.

You also have the option of putting some or all of the money back into your traditional IRA if you want to. There is a once-every-twelve-months rule that would come into play if you chose this option.

 

[Koolau]

There is a once-every-twelve-months rule that would come into play if you chose this option.

Good point. Heh, heh, don't do it again for a while.

 

[Trooper]

Thanks @SecondCor521. I put the word "recharacterize" in quotes because I recall some types of them being prohibited around 2018.

My custodian is Vanguard. I'll try and do the Indirect Roth Conversion online and see if I can; otherwise I will call them.

 

[SecondCor521]

Thanks @SecondCor521. I put the word "recharacterize" in quotes because I recall some types of them being prohibited around 2018.

You remember correctly, but what happened then is unrelated to what you're doing, because you're not doing a recharacterization.

My custodian is Vanguard. I'll try and do the Indirect Roth Conversion online and see if I can; otherwise I will call them.

That should work. I'd bet you won't be able to do it online because what you're doing is sort of uncommon.

 

[Trooper]

That should work. I'd bet you won't be able to do it online because what you're doing is sort of uncommon.

As a follow-up, I wasn't able to transact the Indirect Roth Conversion/60-day rollover online, as SecondCor predicted. So I called Vanguard and their 1st level support needed to transfer me to 2nd-level. Once there, the agent handled my request efficiently and effectively.

Thanks to all who offered guidance.