Traditional IRA to Roth IRA Conversion: Step-by-Step Guide (2026)

Converting a traditional IRA to Roth is straightforward mechanically — but the decision of how much to convert and when requires multi-year planning. This guide covers both: how the conversion actually works, and the strategy framework for pre-retirees with substantial balances.

Step 1: Open a Roth IRA if you don't have one

If you don't already have a Roth IRA, open one at any major custodian (Vanguard, Fidelity, Schwab, etc.) before initiating the conversion. You can open a Roth IRA at any age. There is no income limit on conversions — only on direct Roth contributions. A pre-retiree with $3M in a traditional IRA and $200K of income can convert freely even though they can't make new Roth contributions.¹

You can open the Roth IRA at the same custodian as your traditional IRA (simplest) or at a different custodian (requires a trustee-to-trustee transfer between institutions, which takes slightly longer).

Step 2: Decide how much to convert

This is the core strategy question — and why most pre-retirees benefit from working with a specialist. The goal is to convert enough to fill your current low tax bracket without spilling into a higher one or triggering IRMAA surcharges.

2026 federal brackets (Married Filing Jointly), per IRS Rev. Proc. 2025-32:²

• 12% bracket tops out at $94,300 taxable income
• 22% bracket tops out at $201,050
• 24% bracket tops out at $383,900
• 32% bracket begins at $383,901

Example: A couple with $55,000 of Social Security and pension income has $55,000 − $29,200 (standard deduction) = $25,800 of taxable income. The 22% bracket gives them $201,050 − $25,800 = $175,250 of conversion room before hitting 24%. Converting $175,000 is a reasonable target for that year.

Use the Tax Bracket Calculator to find your exact conversion room based on your other income. The IRMAA-Aware Calculator adds Medicare surcharge thresholds to the picture.

Step 3: Request the conversion from your custodian

Call or log into your IRA custodian's website and request a conversion. Most major custodians have an online conversion form. You'll specify:

• Amount: A dollar amount or percentage. Partial conversions are the norm for the golden-window strategy (converting the full balance at once rarely makes tax sense unless the balance is small).
• Source account: Which traditional IRA to convert from.
• Destination account: Your Roth IRA (at the same or different institution).
• Withholding election: Elect zero withholding. More on why below.

The custodian liquidates enough of your traditional IRA to cover the conversion amount and moves it to your Roth IRA. Your investments inside the Roth begin growing tax-free immediately. The process typically takes 3–7 business days for same-custodian conversions; 1–2 weeks for transfers between institutions.

Step 4: Pay the taxes from outside the IRA

This is the single most important mechanical point: pay your conversion taxes from a taxable account, not by withholding from the IRA itself.

If you elect withholding on the IRA conversion — say, 22% of a $100,000 conversion — only $78,000 lands in the Roth. The $22,000 withheld goes to the IRS as a prepayment. But you've now converted less into the Roth (reducing the long-term tax-free growth benefit) and if you're under 59½, the withheld portion may be subject to a 10% early withdrawal penalty on top of the income tax.

The right move: elect 0% withholding on the conversion. Pay the estimated taxes on your conversion income using quarterly estimated tax payments (IRS Form 1040-ES) or simply set aside cash in a taxable account before year-end. Most financial advisors recommend maintaining a separate "tax reserve" account for conversion years.

Step 5: File Form 8606 at tax time

Your custodian will send a Form 1099-R in January reporting the full conversion amount as a distribution. You'll receive a second 1099-R (or a notation) showing it was converted to a Roth. You report the conversion on your Form 1040 as ordinary income, and you file IRS Form 8606 to track any after-tax basis in your traditional IRA.³

Why Form 8606 matters: If you have ever made nondeductible (after-tax) contributions to any traditional IRA, those dollars represent your "basis" — they're not taxable when converted. Form 8606 tracks this basis year by year. Without it, you may pay tax twice on those after-tax contributions.

If all your traditional IRA contributions were pre-tax (deductible 401(k) contributions rolled over, or deductible IRA contributions), your basis is $0 and 100% of the conversion is taxable. Most people in this situation have zero basis.

The pro-rata rule: what it means for partial conversions

If you have any after-tax money in any traditional IRA — including SEP and SIMPLE IRAs — the IRS calculates the taxable portion of your conversion using a pro-rata formula across all your IRAs, not just the one you're converting from.⁴

Example: You have $950,000 in a pre-tax traditional IRA and $50,000 in a separate IRA containing only nondeductible contributions (basis). Total: $1,000,000. Converting $100,000 to Roth: 95% ($95,000) is taxable. You cannot cherry-pick the after-tax money for a tax-free conversion — the IRS aggregates all IRAs.

If this applies to you, a 401(k) reverse rollover (moving your pre-tax IRA balance into your employer's 401(k) plan) can eliminate the pro-rata problem. See our full pro-rata rule guide for the mechanics.

Partial vs. full conversion: which is right?

For pre-retirees in the golden window (ages 60–73) with $500K+ in traditional IRAs, partial conversions done over multiple years almost always beat a single large conversion. The reason: marginal tax rates. Converting $1M in one year pushes you into 35–37% territory. Converting $100K–$175K per year for 10 years keeps you in the 22–24% range.

The $175K/year path converts $1.75M over 10 years at 22% — $210K lower total tax bill than the single-year conversion, plus the Roth balance compounds tax-free throughout. Use the Lifetime Roth Conversion Calculator to model your specific scenario.

Important timing rules

Dec. 31 deadline: Roth conversions must be completed by December 31 of the tax year. There is no extension. If you want a 2026 conversion, it must be in your Roth account by Dec. 31, 2026.

RMD rule: If you are 73 or older (or 75 if born 1960 or later), you must take your required minimum distribution first before converting any remaining balance. You cannot convert an RMD to Roth. This is a common mistake — see our 7 Roth Conversion Mistakes guide for others.

IRMAA two-year lookback: Your 2026 Medicare premiums are based on your 2024 MAGI. A large 2026 conversion affects 2028 Medicare premiums. Coordinate conversion amounts against IRMAA thresholds ($109,000 single / $218,000 MFJ for first tier in 2026).⁵

Five-year rule: Each conversion starts its own 5-year clock for penalty-free access to the converted principal (if under 59½). After 59½, this rule is largely irrelevant — you can withdraw any converted principal penalty-free. See the 5-year rule guide for detail.

No recharacterization: Under TCJA (2017), recharacterizing a Roth conversion back to a traditional IRA is no longer allowed. Conversions are permanent. Plan carefully — you cannot undo a conversion if markets drop after December 31.

Who benefits most from converting a traditional IRA to Roth

The traditional-to-Roth conversion math is strongest when:

• You're in a temporarily low tax bracket (retirement gap before SS and RMDs)
• You have 10+ years of growth ahead of the Roth balance
• Your heirs will face high marginal rates on inherited traditional IRA distributions (10-year rule)
• You expect tax rates to rise over your lifetime
• You have taxable assets to pay the conversion tax (avoiding the withholding penalty)

The math is weaker if you need the RMD cash annually, your bracket won't change significantly, or your state has high income tax and you can't time the conversion around a planned state move. Our Complete Strategy Guide walks through both sides of the ledger.