Roth conversions: what they are and what to weigh
A Roth conversion moves money from a Traditional IRA or pre-tax plan into a Roth IRA. You pay income tax on the converted amount now, and qualified withdrawals later are tax-free.
Sourced from official pages · Updated September 30, 2026💡 Key takeaways
- A Roth conversion moves pre-tax money into a Roth IRA and adds the converted amount to your taxable income that year.
- Qualified Roth withdrawals are tax-free and a Roth IRA has no RMDs during your lifetime.
- Conversions generally cannot be undone.
- It is usually better to pay the conversion tax with money from outside the retirement account.
How it works
When you convert pre-tax retirement money to a Roth IRA, the converted amount is added to your taxable income for that year. In return, qualified withdrawals from the Roth IRA in retirement are tax-free and a Roth IRA has no required minimum distributions during your lifetime.
Things to weigh
- Tax now vs later: converting can make sense if you expect a higher tax rate in the future, or in a low-income year. Look at how the extra income moves you through the 2026 brackets.
- Paying the tax: it is usually better to pay the conversion tax from money outside the retirement account.
- Timing rules: Roth accounts have holding-period rules for tax-free earnings and early-withdrawal penalties; read the IRS guidance before you convert.
- Conversions cannot be undone (recharacterization of conversions is not allowed).
🔗 Related tools
Compare account types with the Traditional vs Roth IRA calculator and estimate the tax on extra income with the federal income tax calculator. A tax professional can model your specific case.
When a conversion may make sense
- You are in a low-income year and your bracket is unusually low.
- You expect higher tax rates later.
- You want to reduce future RMDs.
- You can pay the tax from savings.
Converting in steps
Some people convert a portion each year to stay inside a target bracket. See how the extra income moves you through the 2026 brackets and try the federal income tax calculator.
🔤 Key terms
| Term | Meaning |
|---|---|
| Conversion | Moving pre-tax money to a Roth IRA |
| Marginal rate | Tax rate on your last dollar of income |
| Five-year rule | A holding period rule for tax-free earnings on Roth accounts |
| Pro-rata rule | A rule that affects conversions when you have after-tax and pre-tax IRA money |
Checklist before converting
- Estimate the tax cost with the tax calculator.
- Confirm you can pay it from outside funds.
- Check the effect on credits, Medicare premiums and financial aid.
- Convert by December 31 to count for the year.
🧮 Example (hypothetical): converting $20,000
If you convert $20,000 and the extra income is taxed at a 22% marginal rate, the federal tax on the conversion is about $4,400. Paying that from a savings account leaves the full $20,000 in the Roth IRA. State tax and effects on credits or Medicare premiums may also apply.
⚠️ Common mistakes to avoid
- Paying the conversion tax from the converted funds and shrinking the Roth.
- Converting so much that you jump brackets unintentionally.
- Forgetting the five-year and age rules for tax-free earnings.
- Ignoring other effects such as higher Medicare premiums or lost credits.
🛠️ Try it yourself
❓ Frequently asked questions
Can I undo a Roth conversion?
Generally no; recharacterization of conversions is not allowed.
Is there an income limit for Roth conversions?
There is no income limit for converting; check IRS guidance for current rules.
Do I owe tax on a conversion?
Yes, on the pre-tax amount converted.
Is there a limit to conversions?
There is no income or dollar limit to converting; check current IRS guidance.
📚 Sources
This guide is general information, not financial, tax or legal advice. Rules and limits change; confirm with the sources above or a licensed professional.