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 to a Roth IRA. The money you move becomes taxable income in the year you convert it, which means you owe federal income tax on the amount transferred. After that tax is paid, the money grows tax-free in the Roth account, and you can withdraw it tax-free in retirement if you follow the rules.

The conversion itself is straightforward: you contact your IRA custodian (the bank, brokerage, or investment firm holding your traditional IRA) and request a direct transfer to a Roth IRA. The custodian moves the funds between accounts without you touching the money. You then report the conversion on your tax return for that year, and you pay tax on the full amount converted.

No one has to approve your conversion. There are no income limits that block you from converting, unlike the income limits that prevent high earners from contributing directly to a Roth IRA. You can convert as much or as little as you want, and you can do it more than once.

Key Takeaways

You pay income tax on the full amount you convert in the year you convert it, so a large conversion can push you into a higher tax bracket.
The conversion itself takes a few days to a few weeks depending on your custodian, but the tax reporting happens when you file your return.
You can convert any amount at any time, and there are no income limits that block you from converting even if you earn too much to contribute directly to a Roth.
If you have other traditional IRAs, SEP IRAs, or straightforward IRAs, the IRS treats all of them as one account for tax purposes when you convert, which can increase your tax bill.
You have until October 15 of the year after the conversion to undo it by filing an amended return, though this option has become more limited in recent years.

The tax bill you owe on a conversion

When you convert, the IRS counts the full amount as ordinary income for that tax year. If you convert $50,000, you add $50,000 to your taxable income. This can move you into a higher tax bracket and increase what you owe on your entire income for that year.

The tax you owe depends on your total income, your filing status, and your state. Someone in the 22% federal tax bracket who converts $50,000 will owe roughly $11,000 in federal tax on that conversion alone, though the exact amount depends on how the conversion affects their bracket. State income tax may explore on top of that.

You pay this tax when you file your return, not when you do the conversion. If you expect a large tax bill, you can make estimated tax payments throughout the year to avoid penalties, or you can pay the full amount when you file.

How the pro-rata rule affects your tax bill

If you own multiple traditional IRAs, SEP IRAs, or straightforward IRAs, the IRS applies the pro-rata rule when you convert. This rule treats all your traditional IRAs as one account for tax purposes, even if they are held at different custodians.

Here is how it works: suppose you have a traditional IRA with $40,000 in pre-tax contributions and another with $10,000 in after-tax contributions (money you contributed but did not deduct). Your total is $50,000. If you convert $10,000 from the second account, the IRS does not let you convert only the after-tax portion. Instead, it counts the $10,000 as 80% pre-tax and 20% after-tax, based on your total balance. So you owe tax on $8,000 of the conversion, not $10,000.

This rule can make conversions expensive if you have a large traditional IRA balance alongside a smaller after-tax balance. Many people use this rule as a reason to convert their entire traditional IRA balance at once, or to roll a traditional IRA into a workplace 401(k) plan first (if their plan allows it) to remove it from the pro-rata calculation.

The steps to convert your traditional IRA

Contact your IRA custodian and ask for a direct trustee-to-trustee transfer to a Roth IRA. You will need to provide the custodian with the details of your Roth IRA account — the institution holding it, the account number, and your routing information if the Roth is at a different bank.

If you do not yet have a Roth IRA, you can open one at the same custodian or at a different one. Opening takes a few minutes online or by phone. You do not need to fund it before the transfer; the custodian can set up the account and receive the transfer in the same process.

The transfer usually takes three to seven business days if both accounts are at the same custodian, or up to two weeks if they are at different institutions. The custodian will send you a confirmation showing the amount transferred and the date it arrived in your Roth account.

After the transfer completes, you report it on your tax return. If you use tax software, you will enter the conversion amount on Form 8606, which is the IRS form for Roth conversions. If you file by hand or with a tax professional, they will complete this form for you.

Timing: when to convert during the year

You can convert at any time during the calendar year. Some people convert early in January so they have the full year to plan for the tax bill. Others convert late in the year after they know their total income for that year, which helps them decide whether a conversion makes sense.

The conversion is reported on your tax return for the year it happens. If you convert in December 2024, you report it on your 2024 return filed in 2025. If you convert in January 2025, you report it on your 2025 return filed in 2026.

Some people do a series of smaller conversions over multiple years to spread the tax bill across years and stay in a lower tax bracket each year. Others do one large conversion in a year when their income is unusually low. There is no rule against either approach.

Roth IRA rules after you convert

Once money is in your Roth IRA, it follows Roth rules. You can withdraw contributions (the money you put in) at any time without tax or penalty. You can withdraw earnings (growth on your money) tax-free after age 59½, but only if you have owned the Roth for at least five tax years.

The five-year rule is per Roth account, not per conversion. If you open your first Roth IRA in 2024 and convert money into it, the five-year clock starts in 2024. Any Roth conversions you do after that use the same five-year clock.

If you withdraw earnings before age 59½ and before five years have passed, you owe income tax on the earnings and a 10% penalty. There are narrow exceptions for disability, medical expenses, and first-time home purchases, but they explore only to earnings, not to contributions.

Undoing a conversion: recharacterization rules

You can undo a Roth conversion by filing an amended tax return, but the rules changed in 2018 and are now very limited. You can no longer recharacterize a conversion back to a traditional IRA straightforward because you changed your mind or because the account lost value.

The only way to undo a conversion now is if you made a mistake in the conversion itself — for example, if you converted money that was not may be able to access to be converted, or if your custodian made an error. In those cases, you contact your custodian and ask them to reverse the transfer, then file an amended return.

If you converted and the account has since lost value, you cannot undo the conversion to avoid the tax. You owe tax on the amount you converted, regardless of what the account is worth now.

Frequently Asked Questions

Can I convert if I have a workplace 401(k)?

Yes. Your 401(k) and your IRA are separate accounts, and a conversion does not affect your 401(k). However, if you have a traditional IRA and a 401(k), the pro-rata rule still applies to your traditional IRA when you convert. Some 401(k) plans allow you to roll your traditional IRA into the 401(k) first, which removes it from the pro-rata calculation.

What if I convert and then my income is higher than I expected?

You still owe the tax on the conversion. You cannot undo it because your income changed. You can only undo a conversion if there was an error in the conversion itself. Plan your conversion based on your best estimate of your year's income, or convert early enough in the year that you can adjust other income sources if needed.

Do I have to convert my entire traditional IRA at once?

No. You can convert part of it and leave the rest in the traditional IRA. However, the pro-rata rule applies to the part you convert, based on your total balance across all traditional IRAs. Converting in pieces does not avoid this rule.

What happens to my traditional IRA after I convert?

The account still exists, but with a lower balance. You can keep it open and continue to take required minimum distributions from it if you are over age 73, or you can convert the remaining balance later. You can also roll it into a workplace plan if your plan allows it.

Can I convert if I am retired and not working?

Yes. You do not need earned income to convert. However, the conversion counts as income for that year, which may affect your tax bracket, your Medicare premiums, or your Social Security taxation. Plan the conversion with your total income in mind.

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.