When I convert to a Roth IRA, does the 10 percent early distribution penalty tax apply to the amount that I have withheld for federal income taxes?
Potentially, yes. While the 10 percent early distribution penalty tax does not apply to the assets that are converted to a Roth IRA, the early distribution penalty does apply to other distributions (including amounts withheld for federal income taxes) when the owner is not yet age 59½ and does not meet another penalty exception. If I am under age 59½, what are the penalty exceptions that would allow me to avoid the 10 percent early distribution penalty tax on the nonqualified distribution of conversion assets or Roth IRA earnings? The 10 percent penalty tax on early distributions does not apply to distributions made to you before you attain age 59½ if any of the following reasons apply: • You have unreimbursed medical expenses that are more than 7.5 percent of your adjusted gross income and provided certain other conditions apply. • The distribution is to pay your medical insurance premiums if you are unemployed and receive federal or state unemployment benefits for 12 consecutive week
