How to Convert a Traditional IRA to a Roth IRA

What happens when you convert a traditional IRA to a Roth IRA

A Roth conversion means moving money from a traditional IRA into a Roth IRA. The money you move is taxed as income in the year you convert it — that is the main cost. After conversion, that money grows tax-free in the Roth account, and you can withdraw it tax-free in retirement if you follow the rules.

You do not have to convert your entire traditional IRA at once. You can convert part of it one year and part another year, or convert nothing at all. The decision depends on your current tax bracket, how much you have saved, and when you plan to retire.

The conversion itself is straightforward: you contact your IRA custodian (the bank, brokerage, or investment firm holding your account), request a conversion, and they move the money. The paperwork takes a few days to a few weeks. The tax bill comes later, when you file your return.

Key Takeaways

You pay income tax on the amount you convert in the year you convert it, calculated at your ordinary tax rate for that year.
After conversion, the money in the Roth grows tax-free and you can withdraw it tax-free in retirement, with no required minimum withdrawals.
You can convert any amount, any year, with no income limit — unlike contributing to a Roth, which has income caps.
If you have other traditional IRAs, SEP-IRAs, or SIMPLE IRAs, the IRS counts all of them together when calculating the tax on your conversion.
You must complete the conversion by December 31 of the year you want it to count, and report it on your tax return.

Who can do a Roth conversion and when it makes sense

Anyone with a traditional IRA can convert to a Roth. There is no age limit, no income limit, and no limit on how much you can convert. This is different from contributing directly to a Roth, which has income caps that phase out high earners.

A conversion often makes sense if you expect to be in a higher tax bracket later, if you want to avoid required minimum withdrawals in retirement, or if you want to leave tax-assistance programs to heirs. It also makes sense if you have a year with unusually low income — a job loss, sabbatical, or early retirement year — because your conversion will be taxed at a lower rate.

A conversion usually does not make sense if you are in your peak earning years and expect lower income in retirement, because you would pay tax now at a high rate to avoid tax later at a low rate. It also does not make sense if you do not have cash outside the IRA to pay the tax bill, because withdrawing from the IRA itself to pay the tax defeats the purpose.

The tax bill: how much you owe and when

The amount you convert becomes taxable income in the year you convert it. If you convert $50,000, you add $50,000 to your taxable income for that year. The tax you owe depends on your tax bracket — if you are in the 24% bracket, you owe roughly $12,000 in federal tax (state tax may apply too).

You do not pay the tax immediately. Instead, you report the conversion on your tax return the following spring, and the tax is due when you file. If you expect a large tax bill, you can make estimated tax payments during the year to avoid penalties.

One important rule: if you have other traditional IRAs, SEP-IRAs, or SIMPLE IRAs, the IRS treats them as one account for tax purposes. If you have $100,000 in a traditional IRA and $50,000 in a SEP-IRA, and you convert $50,000 from the traditional IRA, the IRS counts the conversion as if you converted from a pool of $150,000. This can increase your tax bill. You cannot avoid this by converting only from the traditional IRA and leaving the SEP-IRA alone.

Step-by-step: how to request and complete a conversion

First, decide how much to convert. You can convert the whole account or part of it. Write down the amount.

Second, contact your IRA custodian — the bank, brokerage, or investment firm where your traditional IRA is held. Call their customer service line or log into your account online. Ask to speak with someone about a Roth conversion. They will send you a form or walk you through the process online.

Third, complete the conversion form. You will need to specify the amount, confirm you want it moved to a Roth IRA (either one you already have or a new one), and sign. Some custodians allow you to do this online; others require a mailed form.

Fourth, the custodian moves the money. This usually takes three to ten business days. You will receive confirmation by mail or email.

Fifth, report the conversion on your tax return. You will receive a Form 1099-R from your custodian showing the conversion amount. When you file your return, you report this on Form 8606 (for federal tax) and any required state forms. If you are unsure how to report it, a tax preparer or accountant can help.

What to know about the pro-rata rule and multiple IRAs

The pro-rata rule is the most common trap in Roth conversions. It applies when you have both pre-tax and after-tax money in traditional IRAs.

Here is how it works: suppose you have $100,000 in a traditional IRA (pre-tax contributions and earnings) and $20,000 in a SEP-IRA (also pre-tax). You also have $10,000 in after-tax contributions sitting in a traditional IRA that you never deducted. Your total is $130,000, of which $10,000 is after-tax. If you convert $50,000, the IRS says you are converting a mix: roughly 92% pre-tax and 8% after-tax. So about $46,000 of your conversion is taxable, and about $4,000 is not. You cannot cherry-pick the after-tax money and convert only that.

The pro-rata rule applies across all your traditional, SEP, and SIMPLE IRAs combined. It does not apply to 401(k)s, 403(b)s, or other employer plans — those are separate. If you have a 401(k) at work, you can roll pre-tax money into it to reduce the size of your traditional IRA, which can lower the pro-rata tax hit on a conversion.

Timing, deadlines, and what happens if you change your mind

You must complete the conversion by December 31 of the year you want it to count. If you request it on December 15 but the custodian does not process it until January 5, it counts as a conversion in the new year, not the year you requested it.

You have until October 15 of the following year (the tax filing deadline plus extensions) to report the conversion on your tax return. If you file early, you report it then. If you file late, you report it on the late return.

If you change your mind after converting, you can undo it through a process called a recharacterization — but only if you do so by October 15 of the following year. You contact your custodian, request the recharacterization, and they move the money back to a traditional IRA. The conversion is treated as if it never happened. This is useful if the market drops after you convert and you want to avoid paying tax on a loss, or if you realize the tax bill is too high.

Roth conversion versus direct Roth contribution

A Roth conversion is different from contributing directly to a Roth IRA. A direct contribution is limited to $7,000 per year (or $8,000 if you are 50 or older), and you cannot contribute if your income is above a certain threshold. A conversion has no income limit and no annual cap — you can convert as much as you want.

The trade-off is the tax bill. A direct contribution uses after-tax money you have already paid tax on, so there is no additional tax. A conversion uses pre-tax money, so you owe tax on the full amount converted. If you have high income and cannot contribute directly to a Roth, a conversion is often the only way to get money into a Roth account.

Some people do a "backdoor Roth" by contributing after-tax money to a traditional IRA and then immediately converting it to a Roth. This works around the income cap on direct contributions, but the pro-rata rule still applies if you have other traditional IRAs with pre-tax money.

Frequently Asked Questions

Can I convert a traditional IRA to a Roth if I am over 70?

Yes. There is no age limit on conversions. You can convert at any age, and you do not have to take required minimum withdrawals before converting. However, if you are already taking required minimum withdrawals, you must take them before converting — you cannot use the conversion to avoid the withdrawal.

What if I convert and then the market drops — can I undo it?

Yes, through a recharacterization. You must request it by October 15 of the year after the conversion. Your custodian will move the money back to a traditional IRA, and the conversion is treated as if it never happened. You do not owe tax on the conversion.

Do I have to convert all my traditional IRAs at once?

No. You can convert one IRA, leave others alone, or convert part of one account. However, the pro-rata rule treats all your traditional, SEP, and SIMPLE IRAs as one pool for tax purposes, so converting from one does not let you avoid the rule.

What if I cannot afford the tax bill?

You should not convert if you cannot pay the tax from outside the IRA. Withdrawing from the IRA itself to pay the tax means you lose that money to growth and may face an early withdrawal penalty. It is better to wait until you have cash on hand, or to convert a smaller amount.

Does a conversion affect my Social Security or Medicare?

A conversion increases your taxable income for that year, which can affect your Medicare premiums and the taxation of Social Security benefits. If you are on Medicare, a large conversion might trigger higher premiums the following year. Speak with a tax professional or financial advisor before converting if you are close to Medicare age.

This guide is for general information only and is not medical, financial, legal, or other professional advice. For decisions specific to your situation, consult a qualified professional. See our Editorial Policy.