Roth Conversion Guide: Taxes, 5-Year Rules, 529 and Trump Accounts

How a conversion works

You can convert by a direct trustee-to-trustee transfer, by a transfer between accounts at the same institution, or by taking a distribution and rolling it into a Roth IRA within 60 days. You can convert all of an account or just part of it, and you can convert in more than one year.

How a conversion is taxed

You include in income whatever you would have included if you had simply withdrawn the money, generally in the year of the conversion. It is ordinary income, so it is added on top of your other income and taxed at your top bracket rates. A large conversion can cross into higher brackets.

If you made nondeductible traditional IRA contributions, part of the conversion is your own after-tax basis. You can't pick only the after-tax dollars: Form 8606 spreads the basis over the value of all your traditional, SEP and SIMPLE IRAs as of December 31 plus what you withdrew and converted during the year. The backdoor Roth guide walks through those lines.

Other parts of your return can move with higher income, for example how much Social Security is taxable (see Social Security taxes) and income-tested credits. To see the bracket math with your own numbers, try the Roth conversion tax estimator.

Only the amount that actually goes into the Roth IRA is a conversion. Anything you withdraw and don't put in the Roth IRA within 60 days (including money held back for taxes) is a regular distribution, and if you're under 59½ it can face the 10% additional tax unless an exception applies.

The two 5-year rules

• The conversion clock: if you're under 59½ and withdraw converted money within 5 years starting with the first day of the tax year of that conversion, the taxable part of the conversion can face the 10% additional tax. Each conversion has its own clock.
• The qualified-distribution clock: earnings come out tax-free only after the 5-year period that begins with the first tax year for which a contribution was made to any Roth IRA for you, and once you're 59½, disabled, a beneficiary, or using up to $10,000 for a first home.

Withdrawals come out in this order: regular contributions, then conversions oldest first (the taxable part of each before the nontaxable part), then earnings.

RMDs and timing

If you're at or past your RMD age, the year's required distribution has to come out first and can't be converted. The year you reach 73 counts. See the RMD calculator. Because a conversion can't be reversed, the tax is locked in once it's done, even if the account value drops later in the year.

Connecticut and North Carolina

• North Carolina starts from federal adjusted gross income, so the taxable conversion is generally taxed at the flat 3.99% rate for tax years after 2025.
• Connecticut also starts from federal AGI. Not yet confirmed Whether CT's income-based deduction for traditional IRA distributions applies to an amount converted to a Roth IRA isn't addressed in the sources we checked. Confirm with CT DRS or a tax professional before relying on it.

529 to Roth IRA (not a taxable conversion)

Since 2024, a 529 beneficiary can move 529 money into their own Roth IRA tax-free (IRS Tax Topic 313) if:

• It's a direct trustee-to-trustee transfer.
• The 529 has been open at least 15 years.
• It doesn't include contributions (or their earnings) from the last 5 years.
• Each year's amount fits within the Roth IRA contribution limit for that year ($7,500 in 2026, reduced by any other IRA contributions).
• The total over the beneficiary's lifetime is no more than $35,000.

More in the CHET and 529 guide.

Trump account to Roth IRA

A Trump account is a traditional IRA set up for a child (IRS Notice 2025-68). During the growth period, which ends December 31 of the year before the child turns 18, money generally can't come out and the account can only move to another Trump account. Starting January 1 of the year the child turns 18, the account follows the regular traditional IRA rules, which the IRS says include Roth conversions.

• The converted amount is taxable to the account owner (the young adult), except for any basis.
• Contributions from family and others create basis. The $1,000 pilot contribution, employer contributions and qualified general contributions don't.
• A Trump account is never aggregated with your other IRAs when allocating basis, so its pro-rata math is separate.

Read the full Trump accounts guide. The IRS has said more regulations are coming.

Things to weigh

• Your bracket now compared with what you expect when you withdraw.
• Whether you can pay the tax from money outside the IRA.
• Whether you'll need the converted money within 5 years.
• Other after-tax basis or pre-tax balances that change the pro-rata result.
• Effects on Social Security taxation, credits and state tax.

This guide explains how conversions are taxed. It doesn't recommend converting.