Skip to main content
August 28, 2024
Question

Roth Conversion

  • August 28, 2024
  • 1 reply
  • 0 views

Hello, I just recently switched employers so I converted by 403b to a Roth IRA. I know I am required to pay taxes on the conversion, but am I able to split the taxes in half to pay in the next 2 quarters or do I need to pay the entire tax burden the same quarter I made the conversion? 

    1 reply

    marctu
    August 28, 2024

    So, generally taxes are not due until the tax deadline of the following year, though your question indicates that you have estimated tax liability.   

     

    So let's start here Who must pay estimated tax : 

     

    Individuals, including sole proprietors, partners, and S corporation shareholders, generally have to make estimated tax payments if they expect to owe tax of $1,000 or more when their return is filed.

     

    Your question really is important if you are annualizing your income for purposes of the estimated tax penalty.   If you need to do this you want to make the estimated tax payment in the quarter that you did the conversion to minimize the estimated tax penalty.  If you spit it across two quarters or more your penalty will be higher.

     

    I would also suggest potentially adjusting your Form W-4 for your new employer to account for some or all of the taxes for the remainder of the year, which could lessen or eliminate the need for estimated tax payments.

     

    Thank you so much for your question  @Garychen 

     

    Be well and safe!

     

    Marc T.

     

    Turbo Tax Expert

    27 Years of Experience Helping Clients

     

    **Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"