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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 16580
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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In 2011 I rolled over $41,000 from a regular IRA to a Roth

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In 2011 I rolled over $41,000 from a regular IRA to a Roth IRA. At that time I paid the taxes on it. When it was time to do my income tax... I received a 1099 for that money which I had to claim as income. I never withdrew this money... it was just rolled over. This brought me into a higher tax bracket as I had to claim as income. How can this be possible.

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Sorry to hear about your troubles. When you transfer funds from a traditional IRA to a Roth IRA, that amount is taxed to you as ordinary income. This is because when you take funds out of a Roth IRA you will not have to pay taxes on it. So, later on in your retirement this will be tax free income to you.

Any time you are switching from a pre-tax qualified plan to a Roth plan, you will owe income tax on that fund. But, once you are retired and taking the funds out of the Roth plan there will be no tax.

Please let me know if any of this is unclear, or if you need further assistance. I'm truly sorry that you had to pay tax on this back in 2011. I wish I had better news for you....please don't shoot the messenger!

Thanks again for using and have a great day. Please take a moment to rate my response as "excellent" so that I may receive credit for assisting you today...
Customer: replied 4 years ago.

Why did I have to pay tax twice. I paid when I transferred it over and then I had to claim as income. This doesn't make sense.

Thanks for your follow up. I see you rated our service as "bad" - this penalizes me personally. Please don't rate me bad, simply because the answer is not satisfactory. I have an obligation to give you an honest answer, which I have given. Thanks for your kind understanding.


You should not pay tax twice.

When you placed funds into a traditional IRA, those are pre-tax contributions. You do not pay tax on that money initially.

When you transfer to a Roth IRA you do owe tax, because funds in a Roth account are post-tax, and not taxed when you take them out.

Please let me know if anything is unclear. Thanks again for using, and don't forget to rate my response as "Excellent" so that I may receive credit for assisting you today.

Customer: replied 4 years ago.

Why did I get a 1099 on this money that I already paid tax on. This was NOT income but I had to claim it as income... even though it went into the Roth.


I'm sorry for your situation. However, these negative ratings impact me personally. Please do not rate based on whether or not you like the answer, please rate based on the level of professional service that I have given.

Whenever you make a transfer of funds from a Traditional IRA to a Roth IRA, that is included as income in the year you made the transfer. This money is now in your Roth IRA and if you are over 59.5 you can take the funds out without any penalty or tax.

Are you saying that you have now withdrawn funds from the Roth IRA, and paid income tax when you took it out? Are you over the age of 59.5? If so, you should not have paid tax again when you took the funds out.

Please let me know what else I can do to assist you with this further. Thanks again for using and have a great day.
Customer: replied 4 years ago.

I don't think you are understanding my question or maybe I'm not explaining it right. I am very frustrated. I'm talking about 2011 when the money was transferred. I paid tax on it at time of transfer. Why did I get a 1099 for that amount which I had to claim as income when it was not income. It was just an IRA transaction.

Thank you for your follow up.

I am confused because you should not be taxed twice. At the time of the transfer, taxes were withheld, and then when you file your tax return those withholdings will go towards your tax liability. You should not be paying tax two times on the same IRA transaction.

You should only pay tax once in 2011. You should not pay tax twice. On your 1099 it should show the amount that was withheld for tax, and that amount should be applied so that when you actually file the return you only have to pay tax if there wasn't enough withheld. Only one time should you be taxed on that transfer.

Does this make more sense? Please let me know if you need anything further, as I will stick with you until we get this resolved.
Customer: replied 4 years ago.

What you say makes sense. The problem I'm having is by claiming the 1099 on my income tax... (basically saying its income) it puts me in a higher tax bracket and I had to pay income tax. I am under the impression that I should only receive a 1099 when I withdraw this money which I did not. BTW... I was 65 at the time.


The problem is that this transaction is considered income by the IRS when you transfer from a traditional IRA to a Roth IRA. Did a financial advisor tell you to transfer these funds in this manner? IF so, I would find another advisor. At the age of 65, there is little to no benefit of transferring funds from a traditional IRA to a Roth IRA unless you expect to be in higher income tax brackets later on in your retirement.

You get a 1099 when you make this transfer, as it is considered income to the IRS. This is why you had to claim it on your income tax, and if you had other income you are correct you would have to pay more tax because of this transfer, as it pushed you into a higher bracket.

I'm sorry you find yourself in this situation, but the unfortunate truth is that you have to pay tax on that transfer just as if you took all the funds as income in that year. But, now, you can take money from that Roth account completely tax free.

Thanks again for using Once satisfied with our communications, please rate as "excellent" so that I may receive credit for assisting you today.
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