I am transferring a traditional (rollover) IRA to a ROTH Ira, both within the same company (Ameritrade). The form gives me options in the “Tax Withholding Election” section
1) I elect not to have Federal Income Tax withhold effective (enter the date you wish)
2) Please withhold taxes at the rate of 10%
3) Please withhold taxes at the rate of X% (enter the % you wish)
My goal is to transfer all the money into the Roth IRA and then I will pay taxes out of my regular income, i.e. money in a bank or whatnot. I’d rather have the full amount transferred into the ROTH, and than pay taxes out of my own pocket instead of having anything withheld. Is this legal and possible and if so should I just choose I elect not to have federal income tax withheld. Also if I choose this option what do I enter as the date effective? I don’t want to be hit with penalties. Thanks