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Ok, say a very silly person forgot which of her IRA accounts are traditional and which are Roth accounts and she moved about $10k from a traditional account to a Roth account by mistake just this last week. Should she make estimated tax payments throughout the rest of year to cover the additional taxes she will owe, or can she put it away in ING and pay the tax April 2009?

Barbara
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For tax year 2008 are you eligible to do a ROTH conversion?

Assuming that you are, then will you have sufficient withholding to meet one of the federal safe harbors:
1.) 90% of your 2008 income tax
2.) 100% of your 2007 income tax
(If you are eligible for a ROTH conversion, the 110% would not apply.)

Remember to check your state income tax requirements. They will be different from federal.

Debra
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For tax year 2008 are you eligible to do a ROTH conversion?

Assuming that you are, then will you have sufficient withholding to meet one of the federal safe harbors:
1.) 90% of your 2008 income tax
2.) 100% of your 2007 income tax
(If you are eligible for a ROTH conversion, the 110% would not apply.)

Remember to check your state income tax requirements. They will be different from federal.


And if you're not (won't be) eligible for a Roth conversion this year, you should consider moving quickly to recharaterize the conversion and return it to your traditional IRA.

Ira
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For tax year 2008 are you eligible to do a ROTH conversion?

Yep. We are well within that limit.

Given how late DH and I came to saving for retirement, I find it utterly charming that I can say "Ooops, I've misplaced 10K!" ;^)

This is a good time to make this mistake. I wanted to keep our TIRAs and Roths around 50/50 allocation and this will get us near there, especially since I will try to balance out the tax impact by putting all our 2008 contributions into our TIRAs.

Next year I get my MBA and maybe.... we wouldn't qualify then (fingers crossed)

Barbara
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