What is a Roth conversion?

A Roth conversion moves money from a traditional IRA into a Roth IRA. You pay income tax on the pre-tax amount in the year you convert. After that the money is in a Roth IRA, which has no required withdrawals during your life, and qualified withdrawals from it are not taxed.¹

A Roth conversion does not remove the tax on the money, but it lets you choose the year you pay it.

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A Roth conversion does not remove the tax on the money, but it lets you choose the year you pay it.

People convert because of that choice, and the cost of a conversion depends on it too. This page explains how a conversion works, the rules, how it is taxed, the deadline, the five-year rule, and when a conversion tends to make sense. The return lines and the citations are in the detailed version below.

What is a Roth conversion?

A traditional IRA generally holds money that has not been taxed yet. A Roth IRA holds money that has already been taxed. A Roth conversion moves money from the first kind of account to the second, and the tax is paid for the year of the move.¹

You can also move money from a 401(k) or a similar workplace plan to a Roth IRA, if the plan allows the money to leave it. The same tax rules apply.¹

A conversion is different from a contribution. A Roth IRA contribution is new money from your earnings. The law caps it each year and does not allow it above a certain income. A conversion moves money that is already in a retirement account, and neither limit applies to it.² A backdoor Roth IRA uses a conversion for that reason.

How does a Roth conversion work?

You tell the firm that holds your traditional IRA how much to move to a Roth IRA. It can be a direct transfer between the two accounts. The law also lets you take the money out yourself and put it into a Roth IRA within 60 days.³

You choose the amount. It can be the whole account or any part of it, and you can convert again in later years. Converting a planned amount each year for several years is called a Roth conversion ladder.

You report the conversion on Form 8606 with your tax return for that year.³

The tax can be paid from the money being converted or from money outside the IRA. Any part of the withdrawal that does not reach the Roth IRA, including tax withheld from it, is not converted. That part is generally taxed, and before age 59½ it can also be subject to a 10% additional tax.³

What are the Roth conversion rules?

There is no income limit. You can convert your own traditional IRA at any income. Before 2010 the law allowed a conversion only when income was $100,000 or less.²

There is no dollar limit. The yearly limit on Roth IRA contributions does not apply to a conversion.²

An RMD cannot be converted. Once you reach the age for required minimum distributions, the year's RMD has to come out of the traditional IRA first. Only money beyond the RMD can be converted.⁴ The starting age and the deadlines are in our guide to RMDs.

A conversion cannot be undone. Before 2018 you could reverse one after the fact. A conversion made in 2018 or later is final.⁵

After-tax money changes the tax. If any of your traditional IRAs hold contributions you did not deduct, part of each conversion is not taxed. The law treats all your traditional IRAs as one account to decide how large that part is, so you cannot choose to convert only the after-tax money.⁶

How is a Roth conversion taxed?

The pre-tax amount you convert is ordinary income in the year of the conversion. It is added to your other income and taxed at your regular rates.³

A conversion counts as income for other rules as well. It can raise the share of your Social Security benefits that is taxed, and it can raise your Medicare premiums two years later, because those premiums are set from the income on your tax return two years before.⁷

A conversion does not count toward an RMD, and it does not count as a contribution to the Roth IRA.²⁴

Because the conversion adds to your income, you may need to raise your withholding or make estimated tax payments for that year.³

Illinois does not tax a Roth conversion. Illinois subtracts distributions from IRAs when it figures state income tax, and the Illinois Department of Revenue lists a conversion to a Roth IRA among them. The tax described on this page is the federal tax.⁸

What is the deadline for a Roth conversion?

The deadline is December 31. A conversion is taxed in the calendar year the money leaves the traditional IRA, so a conversion for 2026 has to be made by December 31, 2026.⁹

A contribution works differently. You can make an IRA contribution for a year until the tax filing date the next spring. A conversion cannot be made after December 31 and counted for the year before.⁹

Waiting until late in the year lets you see most of your income before you choose the amount. A request made in the last days of December may not be completed before the year ends.

What is the five-year rule for Roth conversions?

Two five-year periods apply to a Roth IRA, and they answer different questions.

The first applies to each conversion. Every conversion has its own five-year period, counted from January 1 of the year you convert. If you are under 59½ and withdraw converted money within that period, a 10% additional tax can apply to the part that was taxed when you converted. From age 59½, that additional tax does not apply.¹⁰

The second applies to earnings. Earnings come out of a Roth IRA tax-free once you are 59½ and five years have passed since January 1 of the first year you put money into any Roth IRA. If you have never had a Roth IRA, your first conversion starts that period.¹⁰

Withdrawals come out in a set order: contributions first, then conversions from the oldest to the newest, then earnings.¹⁰ If you are over 59½, converted money can come out without tax or the additional tax, and only the earnings may still be waiting on the second period. Our Roth five-year rule calculator shows both periods and what a withdrawal would cost today.

When does a Roth conversion make sense?

A conversion tends to make sense when the rate you pay on it now is lower than the rate the same money would be taxed at later. The later rate is not known in advance. It depends on your future income and on future tax law.

For many people, income is lower in the years between the last paycheck and the first RMD than it was before or will be after. Money converted in those years is taxed at that year's rates. It is also out of the traditional IRA before RMDs begin, so the later RMDs are smaller. Can you avoid taxes on RMDs? shows how much tax an RMD can add.

The size of the conversion matters. Here is a hypothetical example under the 2026 rules. A married couple, both 63, has retired. They have $40,000 of other income, they have not started Social Security, and they have $1,500,000 in traditional IRAs. Without a conversion, their federal income tax is $780.¹¹

A conversion of $93,000 takes this couple to the top of the 12% bracket. A conversion of $150,000 puts $57,000 of it in the 22% bracket. A conversion of $200,000 also lifts their income above the first Medicare income threshold, so each of them pays a higher premium two years later, when both are on Medicare. Our Roth conversion room calculator shows how much fits before the next bracket and the next Medicare tier, and what a conversion of any size costs.

A conversion has costs, and it does not fit everyone. You pay the tax sooner. If your tax rate turns out lower in later years, converting now costs more than waiting would have. If you plan to give IRA money to charity, through gifts paid from the IRA or at your death, that money may not be taxed at all, and converting it means paying tax on it first. A conversion also cannot be reversed if the year goes differently than you expected.

Some couples convert while both spouses are alive for another reason. After one spouse dies, the survivor files as a single person, and the same income can be taxed at higher rates. The widow's penalty explains why.

What goes wrong with Roth conversions?

These are the mistakes we see most often.

People convert a large amount in one year. It pushes part of their income into a higher bracket or raises their Medicare premium two years later.⁷

People have the tax withheld from the conversion itself, so less money reaches the Roth IRA.³

People wait until RMDs have started. The RMD has to come out first, and the conversion is taxed on top of it.⁴

People convert in December before they know their income for the year, and a conversion cannot be undone.⁵

People with after-tax money in an IRA expect to convert only that part, and most of the conversion turns out to be taxable.⁶

People under 59½ take converted money out within five years and owe the 10% additional tax.¹⁰

People never look at a conversion during the lower-income years between retirement and their first RMD.

Where we fit in. We integrate tax considerations into your investment strategy and collaborate with estate attorneys and CPAs to ensure your plan is coordinated. We are not a law firm or accounting firm, so we do not provide legal or tax advice. Everything in this material is for educational purposes, based on primary sources. Before taking any action, please consult the appropriate professionals to apply these ideas to your situation.

A Roth conversion is decided one year at a time: how much to convert this year, at this year's rates. If you would like to look at the years before your first RMD with someone, we are glad to have that conversation.