It was a traditional IRA at PenFed. And yes, it was a direct trustee-to-trustee transfer - I never touched the money. The confirmation paperwork even says "Direct Rollover" at the top.

Thanks for clarifying! So here's the situation: You did a direct Roth conversion from a traditional IRA. This is 100% taxable but not subject to the 10% early withdrawal penalty. The fact that it was trustee-to-trustee is good - it means you don't have to worry about the 60-day rule. The "Direct Rollover" terminology on your paperwork is a bit misleading since technically this was a conversion, not a rollover. This is common though - many financial institutions use the terms interchangeably even though they have different tax implications.

Just checked my 1099-R and box 7 has code "2" in it. What does that mean exactly for my situation?

Thanks for mentioning this! Did you find the annual filing requirements to be complicated or expensive to comply with? I'm trying to figure out if the maintenance overhead makes this approach worthwhile compared to other options.

The annual requirements aren't super complicated, but they do add costs and administrative overhead. Form 5472 isn't something you'd want to DIY - I pay about $600 annually to my accountant to handle it plus the pro-forma 1120. There's also state maintenance fees (annual reports, registered agent fees) which run about $200-300/year for Wyoming. Overall, it costs me roughly $900-1000 annually to maintain everything properly. For me, the banking flexibility is worth it, but if you're just looking for a place to park money, there might be simpler solutions like multi-currency accounts with international banks.

Singapore is good but expensive to maintain compared to US LLCs. I pay about $2000/year for my Singapore company between the local director requirement and corporate secretary fees. Estonia e-residency + company is cheaper but some banks don't like it.

Thanks for this perspective! So even though the statute of limitations gets extended, you think the benefits of taking the time to do it right outweigh that consideration? Have you ever had any issues with shareholders getting their K-1s late?

The statute of limitations concern is overblown unless you're doing something questionable. For legitimate businesses with proper documentation, it's a non-issue. The peace of mind from an accurate return is worth so much more. Regarding K-1s, I am the only shareholder in my S-Corp, so that hasn't been an issue. But I've talked with other business owners who have multiple shareholders, and most understand that getting accurate K-1s is better than getting fast ones with errors. Just communicate clearly with your shareholders about the timeline. Most personal tax returns are on extension anyway if they have business interests.

Yes, that's correct. The statute of limitations for IRS audits is generally 3 years from the date you actually file, not from the original due date. So filing 3 months later does give them 3 more months in that window. But here's some perspective: the overall audit rate for S-Corps is extremely low (less than 0.2%). And if your return is accurate and well-documented, an audit shouldn't be frightening anyway. The far greater risk is rushing and making errors that could trigger an audit in the first place or result in missed deductions that cost you money.

Thanks for this suggestion! I hadn't thought about doing a partial cash out. Do you know if there's a minimum percentage I need to roll over? Also, are there different tax forms I need to fill out for a partial vs. full distribution?

There's no minimum percentage requirement for rollovers - you can roll over any portion of your 401k and take distribution of the rest. The paperwork is essentially the same either way. For the tax forms, your plan administrator will issue a 1099-R that shows the total distribution, with boxes indicating how much was rolled over (non-taxable) versus how much was distributed to you (taxable). You'll report this on your tax return for the year. The partial approach is often the best of both worlds - you get some immediate cash while preserving the tax-advantaged status of the majority of your retirement savings.

This is absolutely brilliant advice. My brother did this with the California state system and said it was the best financial move he ever made. The pension increase was worth way more than what he transferred in.

That's a great suggestion about the photos! Do you think it's also helpful to have something in writing from my boyfriend acknowledging that the room is exclusively for business use? And should I be taking new photos periodically to show consistent business use?

Having some documentation from your boyfriend acknowledging the exclusive business use isn't necessary but could be helpful supporting evidence. A simple email or signed statement could work. Yes, I recommend taking new photos quarterly to show consistent business use over time. Date-stamped photos showing the same dedicated setup throughout the year creates a strong paper trail. I also keep a simple log of business activities conducted in the space - this has been incredibly valuable documentation during a previous review of my returns.

For utilities like internet, you actually have options. You can either use the same square footage percentage (the 13% in OP's case) OR you can track actual business usage if you have a reasonable method of calculating it. If you can document that 80% of your internet usage is truly for business (like through time logs of business calls/uploads vs personal use), you can potentially deduct that larger percentage. Just be prepared to substantiate the higher percentage if asked. I use a simple spreadsheet tracking business vs personal internet hours and it's worked fine for my deductions.