Paying for Roth Conversions

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alpenglow
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Paying for Roth Conversions

Post by alpenglow » Sun Dec 17, 2017 6:09 pm

Now that we've paid off the mortgage and will be maxing out 403b/457/Roth IRAs, we should still have some money leftover to start Roth IRA conversions. We should be able to convert about $25000/yr in the 15% bracket. I am still working and would like to increase withholding to cover the conversions. If I do the conversion at the start of the year and pay throughout the year through payroll withholding, is that acceptable or would I have to file estimated taxes? Thanks. Please no comments about pending tax legislation.

clydewolf
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Joined: Tue Jul 21, 2015 12:51 pm

Re: Paying for Roth Conversions

Post by clydewolf » Sun Dec 17, 2017 6:33 pm

Estimated payments are not required whenever there is enough withheld from other sources.
Payroll withholding will work just fine.

kaneohe
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Joined: Mon Sep 22, 2008 12:38 pm

Re: Paying for Roth Conversions

Post by kaneohe » Sun Dec 17, 2017 6:35 pm

Withholding is fine for your purpose....in fact it is better than paying estimated taxes. If you pay w/ w/h, IRS does nor pay attention to when you earned your income or how/when you paid your taxes (by w/h). The assumption is that you earned and paid taxes evenly during the yr. Some folks w/h the full amount due in December to pay for the whole yr even if income was earned throughout the yr.

In contrast, if you pay by estimated taxes, your payments and earnings need to match up timewise .........so if you earned it all in "Q1", your payment also needs to be in "Q1"........and you need to show and justify that timing.

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alpenglow
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Re: Paying for Roth Conversions

Post by alpenglow » Mon Dec 18, 2017 9:11 am

Thanks for your replies!

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