Roth Conversions: Paying Tax on Purpose

The story: Ruth’s low-tax window

Ruth, newly retired with low income, moves some IRA money into a Roth and pays the tax from savings, while Walt asks about the catch.

1. Narrator: Ruth just retired and hasn’t started Social Security. This year, Ruth’s taxable income is low. This is an example.
2. Ruth: My IRA will be taxed someday anyway. What if I pay some of that tax now, while my rate is low?
3. Narrator: Ruth converts $30,000 from the IRA to a Roth IRA and pays the tax from savings, not from the IRA.
4. Walt: What’s the catch?
5. Narrator: It adds income this year, which can raise Medicare premiums later or the tax on Social Security. And it can’t be undone.
6. Ruth: But that Roth money never needs an RMD, and my heirs get it tax-free.

What you’ll learn

1. What a conversion is

   You move money from a traditional IRA to a Roth IRA and pay regular income tax on the amount that year. Under current law there’s no income limit, and a conversion can’t be undone.

2. Pay the tax from outside money

   Paying the tax from savings outside the IRA lets the whole amount convert. Withholding tax from the IRA means less converts, and before 59½ the withheld part may also face a penalty.

3. RMDs first, and the pro-rata rule

   Past your RMD start age, that year’s RMD must come out first, and it can’t be converted. If any of your IRAs hold after-tax money, each converted dollar is partly taxed, based on all your IRAs together.

4. Benefits and side effects

   Roth money has no RMDs for you, and heirs get it tax-free, though they still face a deadline. But a conversion raises this year’s income, which can raise Medicare premiums and the taxed share of Social Security.

Key words

Roth conversion

moving tax-later money to a Roth and paying the tax now

pro-rata rule

the taxed and untaxed mix when IRAs hold after-tax money

conversion five-year rule

a waiting rule before converted money can come out early without a penalty

Common questions

Should I convert everything at once?

Many people convert smaller amounts over several low-tax years, to stay in lower brackets. A tax pro can help you weigh your own numbers.

Do my heirs pay tax on an inherited Roth?

Usually not, but most heirs must still empty it within a set number of years. The IRS link on the card has the rules.

Remember this

Convert when tax is “on sale,” pay from outside money, and mind the income lines.

Try it: Find your low-tax room

1. Find your taxable income on last year’s tax return.
2. Look up where your tax bracket ends on the fact card.
3. Note the room between them, then try a conversion amount in the public retirement calculator.

No account: use the public Retirement Calculator (/tools/retirement-calculator).

Live facts

Numbers that change over time, with when they were last checked and where they come from.

• Early-withdrawal penalty ends at

  59½

  Retirement-account withdrawals before this age usually owe an extra 10% tax, with some exceptions

  As of February 8, 2026

  Source: IRS.gov(opens in a new tab)

• Required withdrawals start at

  73 (born 1951–1959) or 75 (born 1960 or later)

  When required minimum distributions from traditional retirement accounts begin, by birth year

  As of February 8, 2026

  Source: IRS.gov(opens in a new tab)

• This year’s tax brackets

  Source: IRS.gov(opens in a new tab)

• Five-year rules and inherited Roth rules

  Source: IRS.gov (Publication 590-B)(opens in a new tab)

• The pro-rata rule (Form 8606)

  Source: IRS.gov(opens in a new tab)

• How higher income raises Medicare premiums

  Source: Medicare.gov(opens in a new tab)