I want to convert to my existing roth IRA about 85k of traditional rollover IRA at vanguard, the whole account. This will trigger income tax on that 85k (almost all at 22%) but I can’t pay the income tax from the converted funds because that would be a distribution prior to age 59.5 and trigger a 10% penalty since I'm 43. This means I have to pay that income tax some other way. It will be like 20,000 bucks and I think I want vanguard to send in the money.
1) I can sell VTSAX from my taxable account to pay the tax bill and generate even more income tax.
2) I can maybe ask vanguard to bill my checking account like a regular purchase for the tax bill.
3) Since I got a tax refund last year, maybe owe 20k this year at tax time. I’ll get to keep that money longer where it can earn me something.
Is there another choice? What would you do? One more question, I don’t think it does but does this count against my normal 6,000$ annual roth contribution limits?