How to Do a Roth Conversion in 2026: Step-by-Step Execution Guide

You've run the numbers, you know what bracket you're targeting, and you've set a conversion amount. This guide covers the next step: actually executing the conversion at your custodian — the workflow, the forms you'll receive, and the year-end deadline.

Before you start: 3 prerequisites

Also confirm you have an existing Roth IRA (or open one) at the destination custodian before initiating. Opening a Roth IRA is free and takes 10–15 minutes at most major custodians. You cannot convert directly into a Roth 401(k) you don't yet have; you need the Roth IRA account number before proceeding.

Path A: Converting a traditional IRA at the same custodian as your Roth IRA

This is the simplest path — everything stays at one firm. Both Fidelity, Vanguard, and Schwab have dedicated online conversion tools.

1. Log in and navigate to the conversion tool. Search "Roth IRA conversion" in the help center or navigate to: Accounts → Transactions → Convert to Roth IRA. The exact path varies by firm, but all major custodians support this.
2. Select the source account (your traditional IRA) and destination account (your Roth IRA).
3. Enter the conversion amount. You can specify a dollar amount or a number of shares. For a partial conversion (the typical case), enter the exact dollar amount from your bracket calculation.
4. Elect zero federal withholding. This step matters. The default may offer 10% withholding — change it to 0%. You'll pay taxes separately from outside funds. Withholding from the conversion reduces the Roth balance and creates a secondary tax consequence. ²
5. Review and confirm. Double-check the amount, account numbers, and withholding election. Confirm the transaction. Most conversions settle within 1–3 business days.

There's no form to fill out or mail — the custodian records the transaction and will generate Form 1099-R for you in January. You don't need to notify the IRS directly; the form handles that.

Path B: Traditional IRA at a different custodian

If your traditional IRA is at one firm (say, Fidelity) and you want the Roth IRA at another (say, Vanguard), or your traditional IRA needs to move to create the Roth, you have two options:

Option 1 — Trustee-to-trustee direct transfer (preferred)

1. Open a Roth IRA at the destination firm if you don't already have one.
2. Initiate the transfer at the destination firm (not the source). Most firms allow you to pull assets from another institution. You'll need your source account number and firm name.
3. Designate the transfer as a Roth conversion (not a regular contribution or direct transfer). The funds move from the traditional IRA directly to the Roth IRA. No 60-day window to manage, no withholding concern.
4. Timeline: 3–10 business days depending on the firms.

Option 2 — 60-day indirect rollover

You receive a distribution from the traditional IRA (check payable to you), then deposit the full amount into a Roth IRA within 60 days.³ The entire gross amount must be deposited — if any taxes were withheld, you must replace them from outside funds. Risks:

• Missing the 60-day window turns the distribution into a taxable distribution (plus 10% penalty if under 59½).
• The one-rollover-per-12-months rule applies to indirect rollovers. You can only do one indirect rollover per IRA per 12-month period.
• Most people use Option 1 to avoid these risks. Only use Option 2 if a direct transfer isn't logistically possible.

Path C: Converting from an employer plan (401k, 403b, TSP, 457b)

Employer plan conversions require an extra step because the money must leave the plan before it can go into a Roth IRA. The critical rule: always request a direct rollover, never a distribution paid to you.

The 20% withholding trap

If you request a distribution paid to you from a 401(k) or 403(b), your employer's plan administrator is required by law to withhold 20% of federal taxes. ⁴ If you intended to convert $200,000 and only $160,000 arrives, you'd need to add $40,000 from outside funds to deposit the full $200,000 into Roth within 60 days — otherwise the $40,000 is treated as a distribution. A direct rollover skips the withholding entirely.

The direct rollover process

1. Confirm eligibility to distribute. In most cases you must be separated from the employer (retired, left the job). In-service distributions are sometimes allowed at 59½ or older depending on the plan.
2. Contact your plan administrator and request a direct rollover to a Roth IRA. Specify the destination firm and account number. Some plans allow online requests; others require a form and signature.
3. Choose between traditional IRA intermediate step vs. direct to Roth. Many plans can roll directly to a Roth IRA. Some plans will only roll to a traditional IRA, requiring you to then convert that traditional IRA to Roth as a second step. Either route works — just confirm your plan's options.
4. For TSP (federal employees): as of January 2026, active and retired federal employees can do in-plan Roth TSP conversions without leaving the plan. Alternatively, you can roll to a Roth IRA at separation. See the TSP to Roth conversion guide for the specifics.

Detailed walkthroughs: 401(k) to Roth conversion | 403(b) to Roth conversion | 457(b) to Roth conversion

Cash vs. in-kind conversion

You don't have to sell your investments before converting. Most major custodians support in-kind conversions — the shares (mutual fund units, ETFs, individual stocks) move directly from the traditional IRA to the Roth IRA without being sold.

• Tax treatment is the same either way. The taxable income equals the market value of the converted shares on the conversion date — not your original cost basis in those shares.
• In-kind is often preferable. You stay invested throughout. No risk of missing a market day while cash is out of the market.
• Down-market timing amplifies the benefit. Converting the same number of shares when prices are 20% lower costs 20% less in taxes, while the recovery happens inside Roth tax-free. See Roth conversion in a bear market.

Tax documents you'll receive

Form 1099-R (January)

Your custodian will mail (or post online) a Form 1099-R in January showing the converted amount as a distribution from the traditional account. This is normal and expected — it's not a problem. Box 1 shows the gross distribution; Box 2a shows the taxable amount (typically the same as Box 1 if you have no after-tax basis); Box 7 shows a distribution code (typically "7" if you were 59½ or older, "2" if under 59½).

The form does not identify the money as a Roth conversion. Form 8606 is what tells the IRS it was a conversion, not a regular distribution.

Form 5498 (May)

The receiving Roth IRA custodian will also send Form 5498 by May 31 confirming the conversion amount was deposited. This arrives after the April tax deadline, which is intentional — you don't need it to file. Keep it for your records.

Form 8606 (file with your tax return)

You must file IRS Form 8606 with your tax return for any year you make a Roth conversion. ⁵ This form:

• Reports the converted amount as ordinary income
• Tracks any after-tax (nondeductible) basis you have in traditional IRAs — basis that won't be taxed again
• Carries forward your cumulative Roth conversion history for future years

The penalty for failing to file Form 8606 is $50 per occurrence (IRC § 6693(b)(2)). More importantly, without a filed Form 8606, you have no documented record of any nondeductible IRA contributions — which could lead to double taxation in future years. Your tax software (TurboTax, H&R Block, TaxAct) will prompt you to complete Form 8606 automatically once you enter the 1099-R data.

The December 31 deadline

A Roth conversion must be completed — funds transferred and conversion election finalized — by December 31 of the tax year in which you want it counted. ⁶

This is different from IRA contributions, which can be made through April 15 of the following year. Conversions don't get that extension.

Practical guidance:

• Finalize your conversion amount in October or November, once you have a clear picture of that year's income.
• Initiate by December 20–26 to allow settlement time. Don't wait until December 31 — custodian systems are busy in late December and transfers can take longer than expected.
• If you're doing a 401(k)-to-Roth rollover, start the process in November — plan administrator paperwork can take 2–4 weeks.

Worked example: Susan's 2026 conversion

Susan is 67, recently retired with a $1.6M traditional IRA at Fidelity. She also has a Roth IRA at Fidelity from prior contributions. Her other income this year: a $24,000 pension and $38,000 in Social Security.

In mid-October, Susan uses the tax bracket calculator to find her bracket room. After entering her pension and SS income, the calculator shows she can convert approximately $90,000 before crossing into a higher bracket or hitting IRMAA Tier 1. She decides to convert $87,000 to stay slightly below the ceiling.

November 15 — Susan logs into Fidelity:

1. Navigates to Accounts → Convert to Roth IRA.
2. Selects her traditional IRA as source, her existing Roth IRA as destination.
3. Enters $87,000 as the conversion amount.
4. Changes withholding to $0 (zero).
5. Reviews and clicks Confirm. Conversion settles November 17.

November 17 — Pays taxes separately:
Susan estimates she owes about $19,000 in additional federal tax on the conversion. She pays $19,000 via IRS Direct Pay from her savings account, using the "Estimated Tax" payment type for the current tax year.

January 2027 — Tax documents arrive:
Fidelity posts Form 1099-R showing an $87,000 distribution from her traditional IRA. Susan's tax software asks her whether this was a Roth conversion — she answers yes, and the software generates Form 8606 automatically.

Result: $87,000 converted at a blended rate of roughly 21–22% effective federal rate. That amount — plus all future growth — is now permanently in Roth, accessible tax-free. Susan plans to repeat this for 5–6 more years before RMDs begin at age 73, ultimately converting $500,000+ of her IRA balance.