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Yes, I'm talking about IRA's. Sorry for posting in the 401k board ... I didn't readily see an IRA board; Maybe I missed it.

There isn't an "IRA" board, but since this is really a tax question, there is a Tax Strategies board https://boards.fool.com/tax-strategies-100155.aspx?mid=34886...

That said, I would agree with Fuskie that there there would be no reason for your Scenario Two. Further, I would suggest that doing Scenario Two would actually cause problems:
- You would create excess contributions to the T-IRA, which could trigger penalties
- Your 1099s would show a significant conversion from the T-IRA to the Roth IRA. Now, since the Roth IRA money had previously been taxed, technically, you wouldn't owe taxes on it, but trying to show that on your tax return, since you were 'converting' the excess contributions would be a challenge and would probably draw scrutiny.

I will point out that you can technically take out the entire amount from the Roth IRA, not just the contributions. But, if you don't get the money back into a Roth IRA within 60 days, you will be liable for taxes and penalties on anything over and above your regular contributions and conversions that are at least 5 years old. So, you would need to be VERY SURE that you could get the money back into an IRA within the 60 day timeframe if you were to withdraw more than your regular contributions, and conversions that were at least 5 years old.

I will further point out that you are limited to a single non-direct rollover in all of your accounts (IRA, 401(k), etc.) every 365 days. So if you've done this in the last year, or you do another one of these within the next year, the money that you've rolled back in will be an excess contribution, and you will be liable for taxes and penalties.

AJ
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