njkotz28

Last year, I had significant capital losses in a cash management account held at Merrill Lynch. I used the $3,000 last year as a way to reduce my taxable income and I still have several thousands that I can roll into 2019 tax year. My question is, can I use those losses to offset a conversion of funds from my traditional IRA to my roth IRA? Assuming I transfer 10,000 dollars from my traditional IRA into my roth, and assuming I have a tax rate of 25%, that $2,500 would essentially be nullified by my $3,000 capital loss carryover? Am I correct with this assumption or do the capital losses have to come from one of the ira accounts?

OK thank you for all the responses. I suppose I will return the funds and put this thing to bed.

I have an issue that just arose, I was notified by my previous employer plan sponsor that I was overpaid when I left my 401k. I was overpaid roughly $6000 due to an error by the plan administrator back in 2016. I have since rolled those funds into my own personal IRA and now Vanguard is requesting I give those funds back. I dont feel that I am obligated to return those funds as I was not the one who made the mistake and in most lines of work you are held accountable for mistakes and not allowed to pass them off to someone else. Additionally I dont feel I should have to pull those funds from my IRA which would be an early distribution (additional tax consequence) and I would then need to amend my tax return from 2016 which is time and resources spent when that would not be necessary had this error not occurred. I am curious if anyone has insight into what my rights and options are? I can obviously not respond but dont want to have a law suit on my hands and dont want to have this issue come up in 20 years when they claim some crazy thing like I now owe them $50,000 because of inflation and interest.