To pay estimated taxes on a Roth conversion, send the IRS the added tax through quarterly estimated payments using Form 1040-ES, or increase federal withholding on your wages or pension to cover it. Size whichever route you choose to hit one of two safe harbors: 90% of your current year’s total tax, or 100% of last year’s tax (110% if your prior-year adjusted gross income was over $150,000). Miss both and the IRS charges an underpayment penalty running at the federal short-term rate plus three percentage points.
Start With the Taxable Amount
You’re paying tax on whatever portion of the conversion counts as ordinary income. If every dollar in your traditional IRA came from deductible contributions and growth, the full conversion is taxable and the math ends there.
It gets harder if you’ve ever made nondeductible contributions. The pro-rata rule treats all your non-Roth IRAs (traditional, SEP, and SIMPLE) as one pool, so a conversion pulls a proportional slice of pre-tax and after-tax money.1Office of the Law Revision Counsel. 26 U.S. Code 408 – Individual Retirement Accounts Divide your total nondeductible contributions across those accounts by the combined December 31 fair market value, then multiply by the amount you converted. That’s the tax-free portion. Everything else is taxable income, reported on Form 8606.
One planning move can shrink the taxable share: rolling pre-tax IRA balances into a current employer’s 401(k) before year-end pulls that money out of the pro-rata pool, leaving only after-tax basis behind to convert.2Internal Revenue Service. Rollovers of After-Tax Contributions in Retirement Plans Not every plan accepts incoming rollovers, so ask first.
The Two Safe Harbors That Stop the Penalty
You’re required to make estimated payments if you’ll owe $1,000 or more after subtracting withholding and credits.3Internal Revenue Service. Estimated Taxes A conversion of any meaningful size clears that bar. The penalty is essentially interest on the underpaid amount from each quarterly due date until you pay.4Office of the Law Revision Counsel. 26 USC 6654 – Failure by Individual to Pay Estimated Income Tax
You avoid it by meeting either test:
- Pay at least 90% of the tax you’ll actually owe this year through withholding and estimated payments combined.
- Pay at least 100% of the total tax on last year’s return. If last year’s AGI was over $150,000 ($75,000 if married filing separately), the threshold is 110%.5Internal Revenue Service. Underpayment of Estimated Tax by Individuals Penalty
The prior-year rule is usually the easier target because the number is fixed and knowable. If your prior-year tax was $40,000 and your AGI was under $150,000, paying $40,000 through withholding and estimated installments makes you penalty-free even if a big conversion drives your actual liability to $70,000. You’ll still write a check for the remaining $30,000 at filing time. No penalty attaches to it. That gap between avoiding the penalty and paying the full bill is where the planning happens: you don’t have to pre-pay every dollar of conversion tax, you just have to clear a safe harbor.
Turning the Safe Harbor Into a Quarterly Dollar Amount
If you’re using the prior-year safe harbor, the arithmetic is short. Take 100% (or 110%) of last year’s total tax, subtract this year’s expected withholding, and split the remainder into four equal installments.
If you’re aiming at the 90% current-year rule, Form 1040-ES has a worksheet that walks through it: project all your income for the year including the taxable portion of the conversion, apply the current brackets, subtract credits, subtract expected withholding, and divide what’s left by four.6Internal Revenue Service. About Form 1040-ES, Estimated Tax for Individuals
A conversion done late in the year is not steady income, and the equal-payment method can look like you underpaid the earlier quarters. Form 2210’s Schedule AI, the annualized income installment method, recalculates each quarter’s required payment based on income actually received through that point.7Internal Revenue Service. Instructions for Form 2210 For a November conversion, almost all the added tax lands in the fourth-quarter installment. This method only matters if you’re leaning on the 90% current-year rule; the prior-year safe harbor kills the penalty regardless of when income arrived.
Quarterly Due Dates and How to Send Payment
Under the equal-payment approach, the four federal deadlines are:8Internal Revenue Service. Individuals 2 – When Are Quarterly Estimated Tax Payments Due?
- April 15, for income from January 1 through March 31
- June 15, for income from April 1 through May 31
- September 15, for income from June 1 through August 31
- January 15 of the following year, for income from September 1 through December 31
When a date falls on a weekend or federal holiday, the deadline shifts to the next business day.
The IRS accepts payment several ways. IRS Direct Pay is a free online tool that debits a checking or savings account with no advance registration.9Internal Revenue Service. Direct Pay With Bank Account The Electronic Federal Tax Payment System (EFTPS) requires enrollment ahead of time but lets you schedule payments up to 365 days out, which is useful for locking in all four installments after a single calculation. You can also mail a check or money order payable to the U.S. Treasury with a Form 1040-ES voucher; write your Social Security number, the tax year, and “Form 1040-ES” on the memo line. Credit and debit card payments go through IRS-approved third-party processors and carry a convenience fee of roughly 1.75% to 1.85% for cards, which on a $15,000 payment runs $260 to $280.10Internal Revenue Service. Pay Your Taxes by Debit or Credit Card or Digital Wallet
Payments must arrive or be postmarked by the deadline. A day late triggers the underpayment calculation for that installment.
Withholding: The Better Option for Late-Year Conversions
You don’t have to use quarterly payments at all. If you draw wages or a pension, filing a new Form W-4 or W-4P to increase federal withholding for the rest of the year is often the smarter route. Federal withholding is treated as paid evenly across all four quarters no matter when in the year it actually leaves your paycheck.11Internal Revenue Service. Publication 505 – Tax Withholding and Estimated Tax
That treatment is powerful. Convert in September, realize in October you need to cover $20,000 in extra tax, and a single estimated payment leaves you exposed on three already-passed quarterly deadlines. Pull the same $20,000 out of your remaining paychecks through higher W-4 withholding, and the IRS deems one-fourth paid on each quarterly date, including the ones behind you. The catch is practical: you need enough pay periods left to absorb the withholding. A December conversion with only one paycheck to go can produce a check that’s mostly tax.
Don’t Have Taxes Withheld From the IRA Itself
When the custodian processes the conversion, they’ll usually ask if you want federal tax withheld from the converted amount. For most people the answer is no. Money withheld from the IRA reduces the amount that actually lands in the Roth, cutting into future tax-free growth. And the withheld portion is treated as a distribution rather than a conversion, so if you’re under 59½ it’s subject to the 10% early distribution penalty on top of ordinary income tax.12Internal Revenue Service. Topic No. 557 – Additional Tax on Early Distributions From Traditional and Roth IRAs
A 52-year-old converting $100,000 with 20% withheld ends up with $80,000 in the Roth, owes tax on the full $100,000, and owes an extra $2,000 penalty on the $20,000 withheld.13Office of the Law Revision Counsel. 26 U.S. Code 72 – Annuities; Certain Proceeds of Endowment and Life Insurance Contracts Paying the tax from a taxable brokerage or savings account instead lets the full $100,000 grow tax-free and sidesteps the penalty.
State Estimated Payments Are Separate
Federal payments don’t cover state tax. Most states with an income tax treat the federally taxable portion of the conversion as state taxable income too, and they require their own estimated payments through their own forms. Nine states have no income tax, and a few exempt some retirement income.
State minimum-liability thresholds for requiring estimated payments generally sit between $100 and $1,000, and many states mirror the federal safe harbor structure (90% current-year or 100% prior-year). Deadlines often but not always match the federal quarterly dates, and a few states use only three payment periods. Check your state revenue department for the specific form, thresholds, and schedule. A state underpayment penalty applies separately even when your federal payments are perfectly on track.
Ripple Effects That Change What You Owe
Because a conversion inflates your adjusted gross income, it can trigger tax items beyond the ordinary income line. Two of them can materially change your estimated payment.
Medicare Premium Surcharges
Medicare Part B and Part D premiums are income-tested using modified AGI from two years earlier, so a 2026 conversion affects 2028 premiums. Surcharges escalate in tiers: for joint filers in 2026, Part B surcharges begin above $218,000 in modified AGI at an extra $81.20 per person per month and rise to $446.30 per person per month above $410,000.14Centers for Medicare & Medicaid Services. 2026 Medicare Parts A and B Premiums and Deductibles Single filers hit the first surcharge at $109,000. Part D adds its own surcharges at the same breakpoints. Spreading a large conversion across two or more tax years to stay below a bracket is a routine planning move for retirees.
Net Investment Income Tax
The conversion itself is not net investment income. But the AGI bump can push other investment income (dividends, capital gains, rent) above the 3.8% NIIT thresholds: $250,000 for joint filers, $200,000 for single filers, $125,000 for married filing separately. Those thresholds are not indexed for inflation.15Internal Revenue Service. Topic No. 559 – Net Investment Income Tax If you normally sit just below the line, a conversion can pull tens of thousands of dollars of investment income into the 3.8% zone. Build that into the number you’re covering with estimated payments or withholding.