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Just remember the conversion gets treated as part of your ordinary income for the year.

And to avoid an underpayment penalty because of the conversion, you should plan on meeting a safe harbor, or send in a quarterly estimate payments, with a plan to fill out Form 2210 to show that the payment was associated with the quarter the conversion occurred. (Hint - it's easier to meet a safe harbor.)

AJ
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ushats,

You wrote, If I contribute to Roth 401 k at work, can I still convert some of my traditional IRA to Roth IRA that same year? Is there a limit? Is Conversion based on income limits like contribution are?

There are no income limits on Roth conversions. Convert all you like. Just remember the conversion gets treated as part of your ordinary income for the year.

- Joel
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Just remember the conversion gets treated as part of your ordinary income for the year.

And to avoid an underpayment penalty because of the conversion, you should plan on meeting a safe harbor, or send in a quarterly estimate payments, with a plan to fill out Form 2210 to show that the payment was associated with the quarter the conversion occurred. (Hint - it's easier to meet a safe harbor.)

AJ
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to avoid an underpayment penalty because of the conversion, you should plan on meeting a safe harbor, or send in a quarterly estimate payments, with a plan to fill out Form 2210 to show that the payment was associated with the quarter the conversion occurred. (Hint - it's easier to meet a safe harbor.)

Could you please expand on that? Does a "safe harbor" include having more withheld than you paid in taxes the previous year?
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Could you please expand on that? Does a "safe harbor" include having more withheld than you paid in taxes the previous year?

Yes, for those whose AGI is less than $150k, withholdings of at least the prior year's tax liability is one safe harbor to avoid underpayment penalties. For those whose prior year AGI was more than $150k, a safe harbor would be having at least 110% of the prior year's tax liability withheld. There are other safe harbors that are documented in IRS Pub 505 https://www.irs.gov/pub/irs-pdf/p505.pdf

AJ
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