I recently changed jobs and because I am still early in my career, I would like to rollover my traditional 401-K to an existing Roth IRA. I understand the tax consequences of the conversion and I expect to pay the taxes come tax season. I don't think it will put me in a higher tax bracket.. but I would like to know if I can take a withdrawal out of my Roth IRA next year to pay these taxes, since withdrawals on contributions are penalty-free.
Does the money I convert from the traditional 401-K count as as "contribution" to my Roth IRA? If so, would that mean that I would not get hit with any penalties if I withdraw from my Roth IRA next tax season (as long as I am not touching the earnings)?
E.g. If I rollover $40,000 from my traditional 401-K to a Roth IRA now, and my Roth balance during tax season is $40,000 + earnings, can I withdraw some of my contributions to pay off the taxes from the rollover?
Any advice would be greatly appreciated!