How much tax will I pay if I convert my IRA to a Roth?

How much you pay in taxes when converting to a Roth IRA depends on where you live and your current tax bracket. State taxes can increase the cost of a conversion, and a conversion could push you into a higher tax bracket.

If I convert to a Roth, can I reverse the conversion?

No, a Roth IRA conversion is not reversable. You can move funds back out of a Roth IRA and into a traditional IRA, but this typically requires withdrawing the converted funds within a set time frame to avoid paying more taxes. Note that withdrawals often come with penalties, meaning you may pay more when trying to reverse a Roth IRA conversion. Talk with your financial advisor to determine the best course of action if you plan on reversing a conversion.

Can I convert individual stocks or mutual funds from my IRA to a Roth?

Yes, you can do an "in-kind" conversion of stocks and mutual funds, meaning your assets are directly transferred from your traditional IRA to the Roth IRA. Alternatively, you can liquidate your assets in your IRA and use the proceed in your Roth IRA to purchase the same assets. Keep in mind that any of these actions can lead to taxable events.

Are income eligibility limits still in place to make an annual contribution to a Roth IRA?

Yes, the same income eligibility limits are in place after you make a Roth IRA conversion. Learn more about IRA contribution limits to determine limits for the current tax year.

Roth IRA Conversion Guide: Benefits & Rules

Important information:

Edward Jones, its employees and financial advisors cannot provide tax or legal advice. You should consult your attorney or qualified tax advisor regarding your situation.

This content is intended as education only and should not be interpreted as specific advice. Investors should make decisions based on their unique financial situation.