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Being a convert

January 13th, 2026 at 02:39 pm

This year will also be the first year I embark on my journey towards eventually converting all my traditional IRA money into my Roth IRA.

My plan is to convert $10k chunks every year, and when I file my taxes this year, I basically pay $1k in taxes, right?  I am no longer working, and paid no taxes on last year's tax return.

Likewise, the process seems very easy.  I made the money transfer on my phone app while lying in bed.  In fact, the whole thing seems TOO easy, and that's making me feel slightly uneasy, like I must be missing something or am not understanding some detail....  Am I missing anything?

Posted in Uncategorized | 10 Comments »

10 Responses to “Being a convert”

  1. Lots of ideas Says:
    January 14th, 2026 at 12:21 am 1768350068
    1768350068

    I am not sure what funds you are using to support yourself, or what you might be earning in taxable accounts.
    If you have minimal interest/dividend/capitol gains income, and assuming that you file as Single
    the 2026 Standard deduction is $16,100.

    You then pay 10% on the first $12,400, and 12% on the next 38,000 up to $50,400.

    So if you have earned income of less than $16,100 you will pay nothing on your conversion - and can in fact convert $16,100 tax free.

    Otherwise I think your calculation is correct. You might incur a small penalty if you don’t pay estimated taxes on the money, but if you owe nothing - no penalty.

    You’ll get a form - not sure if it is 1099, 1040, or something else in early 2027 just like you do for any earned income.







  2. Dido Says:
    January 14th, 2026 at 05:26 am 1768368393
    1768368393

    The form you'll receive next year is 1099-R from the IRA reporting a distribution. There will also be a form 5498 (which is an information form, not anything that is filed) that will record the Roth conversion.

    You don't need to convert ALL of your traditional IRA; that would be a waste as you can expect deductions in the future. Also if you have any charitable inclinations, you want to leave funds in the IRA so that when you are over 70 and a half you can use the funds tax-free to make qualified charitable distributions.

  3. Tabs Says:
    January 14th, 2026 at 10:03 am 1768384993
    1768384993

    Super duper helpful! Thank you both!

  4. LivingAlmostLarge Says:
    January 14th, 2026 at 10:06 pm 1768428379
    1768428379

    don't you want to convert more?

  5. Dido Says:
    January 15th, 2026 at 01:32 pm 1768483957
    1768483957

    Also the form 5498 comes out in May or June--it is the form that reports contributions to IRA accounts, whether Roth or traditional. You can contribute to an IRA for the prior year up until April 15th, so those forms come out later, whereas 1099-Rs are for distributions to be reported on the return, so those come out typically in the second half of January.

  6. Tabs Says:
    January 16th, 2026 at 07:26 am 1768548407
    1768548407

    LAL: I would if I think I can get away with it without paying taxes on them. I also sold my individual stocks in my taxable account that I had been holding around for a while, and they have also resulted in gains so....

    However, I will go back and double check my math just to be sure. Still, as Dido mentioned, I don't have to convert everything, that is true, and seeing as how I have two decades before even worrying about RMDs, I guess I'm not too much in a rush to begin with.

    More than anything, because this is my first time doing this, I think I just want to take it baby steps at a time.... Because honestly, all this feels slightly overwhelming to me and I am still rather confused about the whole thing.

    Thanks again, Dido! So nice to get free tax advice on here hahahaha. Freebies are always appreciated.

  7. Dido Says:
    January 16th, 2026 at 02:07 pm 1768572441
    1768572441

    One more bit of advice--if you have two decades to RMDs, you must be in your early to mid 50s. Note that Medicare premiums when you turn 65 are based on your mAGI (modified AGI, basically AGI + tax-exempt interest) from two years prior, which means that you have through age 62 to do large Roth conversions without a big (but one-year) Medicare hit. I think it's wise to start slowly, but you might consider something larger along the way, depending on what your goals are and what the long-term consequences are --do you have a legacy goal (children or charity) or is your IRA just for supporting yourself; and also, what do you want to do with the time you have left on earth? As we say in the industry, "Don't let the tax tail wag the dog." I recommend reading Bill Perkins' book "Die with Zero" for an interesting perspective.

  8. Tabs Says:
    January 16th, 2026 at 04:10 pm 1768579810
    1768579810

    Once again, thank you for the wonderful free advice.

    I am indeed early 50s. I also have kids, though I don't have so much of a Legacy Goal, but more like a Legacy Let's See How This Goes and Hope There's Something Left For Them general idea. I wish I took personal finances much more seriously when I was younger, but sadly, I did not. So, here I am.

    Ok, so I have to think about Medicare as well, got it. Even with that, I've got like a 15 year window? That's still plenty of time.

    I will take a look at that book recommendation. Thanks again.

  9. rob62521 Says:
    January 16th, 2026 at 08:02 pm 1768593731
    1768593731

    I never had biological kids, but my DH has along with grandchildren. One thing he and his late wife told them all was not to expect an inheritance. That's not saying they aren't in the will, but there was no promise of big bucks coming their way.

  10. Dido Says:
    January 17th, 2026 at 12:04 am 1768608297
    1768608297

    Whichever year where you are 62 at year's end is the last year that you can ignore IRMAA (the Income-Related Medicare Adjustment Amount).

    Your tax return for the year you turn 63 will be used to determine your age 65 premium.

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