Roth Conversion Rules: The Four That Trip People Up

What this page covers, and what it does not

A Roth conversion moves money from a traditional IRA into a Roth IRA. You owe ordinary income tax on the pretax amount in the year you convert.

That basic tax hit, the Form 8606 reporting, the separate 5-year clock on each conversion, and the Medicare IRMAA surcharge are all covered in our rollover IRA vs Roth IRA comparison. Start there if you are still deciding whether to convert at all.

This page picks up where that one stops. It covers the four mechanics that decide how much a conversion actually costs: how the IRS splits taxable from tax-free money, how much to convert in one year, why you cannot change your mind, and what happens once required distributions begin.

Rule 1: The pro-rata rule blocks you from converting only after-tax money

You cannot pick out your after-tax dollars and convert just those. The IRS treats all of your traditional IRAs as one pot.

Form 8606 line 6 asks for the value of all your traditional IRAs as of December 31, plus any outstanding rollovers. The Form 8606 instructions define the term traditional IRA to include traditional SEP IRAs and traditional SIMPLE IRAs. So an old SEP IRA and a rollover IRA from a past job both land in that pot.

Two things stay out. Roth IRAs are not counted. And a 401(k) is not an IRA, so a workplace plan balance does not appear on line 6 either. That single fact drives a common planning move: some people roll IRA money into a current employer plan first, so it is no longer sitting in an IRA on December 31.

The form then does simple math. Line 5 is your total after-tax basis. Line 9 adds your December 31 IRA value, your distributions, and the amount you converted. Line 10 divides line 5 by line 9. That decimal is the share of your conversion that comes out tax free. The rest is taxable income.

The date matters as much as the math. Line 6 uses the December 31 value, not the balance on the day you converted. Money that arrives in an IRA late in the year still counts.

A worked pro-rata example

Say you put $7,000 of after-tax money into a new traditional IRA. You also have a $93,000 rollover IRA from an old job, all of it pretax. You convert the $7,000 and assume no growth for the rest of the year.

Here is how Form 8606 sees it. Line 5, your basis, is $7,000. Line 6, the December 31 value of all traditional IRAs, is $93,000. Line 7, other distributions, is $0. Line 8, the amount converted, is $7,000. Line 9 adds those to $100,000.

Line 10 divides $7,000 by $100,000, which is 0.070. Line 11 multiplies your $7,000 conversion by 0.070 and gets $490. Only $490 of the conversion is tax free. The other $6,510 is added to your taxable income.

That is the trap. It felt like moving after-tax money, but 93% of it was taxable. If your only traditional IRA held that same $7,000 of basis and nothing else, the full amount would convert tax free. Balances elsewhere are what change the answer.

See how the receiving account grows once the tax is paid with our Roth IRA calculator.

Rule 2: Bracket filling, and why timing decides the cost

You do not have to convert a whole account at once. Partial conversions let you add only as much income as fits inside your current tax bracket.

Federal brackets apply to taxable income, which is your income after the standard deduction or itemized deductions. For 2026, the standard deduction is $32,200 for married couples filing jointly and $16,100 for single filers.

For 2026, the 22% bracket for married couples filing jointly runs from $100,800 to $211,400 of taxable income. Above $211,400 the rate becomes 24%. For single filers, the 22% bracket runs from $50,400 to $105,700, and 24% starts above $105,700.

An example makes the idea concrete. A married couple with $150,000 of taxable income has $61,400 of room before the 24% bracket begins. Converting $61,400 keeps every converted dollar at 22%. Converting $80,000 instead pushes $18,600 into the 24% bracket.

Timing matters because your bracket is not fixed for life. Required minimum distributions from traditional IRAs generally begin at age 73. Someone who stops working before then may have several low-income years with unusual bracket room, before both an RMD and Social Security start adding to the total. Those gap years are when conversion capacity is usually widest.

The tradeoff runs the other way too. Converting uses cash you could have kept, and it raises this year's income for anything else that keys off income. Model your future income first with our retirement income calculator, and see the rest of the picture on our retirement hub.

Rule 3: A conversion cannot be undone

Once you convert, it is permanent. The Tax Cuts and Jobs Act removed the ability to reverse one.

IRS Publication 590-A puts it plainly under the heading no recharacterizations of conversions made in 2018 or later. A conversion of a traditional IRA to a Roth IRA, and a rollover from any other eligible retirement plan to a Roth IRA, made in tax years beginning after December 31, 2017, cannot be recharacterized as having been made to a traditional IRA. The last year this was allowed was 2017.

Here is the distinction people get wrong. Recharacterizing a regular contribution is still allowed. If you contribute to a Roth IRA and then want it treated as a traditional IRA contribution instead, Publication 590-A says you can generally do that through a trustee-to-trustee transfer by the due date of your return, including extensions. That option applies to contributions only. It has never applied to conversions since 2018.

The practical effect is that a conversion has no undo button if the market drops afterward. You still owe tax on the value at conversion. That is one reason many people convert in smaller slices across several years rather than all at once.

Rule 4: In an RMD year, the RMD comes out first

Required minimum distributions generally begin at age 73. Publication 590-A states that distributions must begin by April 1 of the year following the year in which you reach age 73. Later years are due by December 31.

Once you are in an RMD year, one rule overrides everything else. Publication 590-A says you cannot convert amounts that must be distributed from your traditional IRA for a particular year, including the calendar year in which you reach age 73, under the required distribution rules. The same publication notes that amounts required to be distributed for the year are not eligible for rollover treatment.

In plain terms, the RMD has to leave the account and go to you. It cannot land in a Roth IRA. So in any year you owe an RMD, you take the RMD first, and only the amount above it can be converted.

This has a knock-on effect on Rule 2. The RMD is taxable income on its own, so it eats into the bracket room you had planned to fill with a conversion. A conversion in an RMD year is often smaller than the same person could have done at 70. Estimate the RMD itself with our RMD calculator.

If you are still comparing account types before any of this applies, our Roth IRA vs traditional IRA comparison and our 401(k) vs Roth IRA comparison cover the earlier decision.

Frequently asked questions