If I choose to go with the indirect method (another name for "Fairmark's strategy 3"?) and assume I have $12,000 total ( $10,000 basis + $2,000 earnings) in my after-tax account,
are these following steps I need to execute:
1) Ask Fidelity for a distribution (NOT rollover) of my after-tax ONLY money
2) Fidelity will send me a check of $11,600 ($12,000 total - $400 withholding)
3) I then roll $2000 into a traditional IRA (TIRA)
4) After the TIRA transaction is complete, roll $10,000 ($9,600 balance from distribution + $400 from other sources) into a Roth IRA?
I have multiple accounts with Fidelity: 401K, Rollover IRA (TIRA), Roth, and regular (taxable) brokerage accounts
For step 2, could I just ask Fidelity to distribute the after-tax 401K money directly to my regular Fidelity brokage account? then
for steps 3 and 4, call them to move the money from the brokerage account to the Rollover and Roth, respectively?
What would my 1099R(s) look like if I complete the above steps?
what would happen to my 20% withholding in step 2? Is it similar to the tax withheld in my paycheck and counted toward paid tax amount in my 1040?
Thank you so much for educating me on this subject.