---
title: "How do Roth conversions work, including the five-year rules and the pro-rata trap? Answer in under 100 words. Cite only eCFR (www.ecfr.gov) sources."
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---

# How do Roth conversions work, including the five-year rules and the pro-rata trap? Answer in under 100 words. Cite only eCFR (www.ecfr.gov) sources.

A Roth conversion shifts a traditional-IRA balance into a Roth IRA through a 60-day rollover, trustee-to-trustee transfer, or same-trustee redesignation, treating the moved amount as a distribution from the traditional IRA and a rollover contribution to the Roth IRA (26 CFR §1.408A-4 A-1). Except for any basis returned under §408(d)(1)-(2), the converted amount is includible in gross income, and the §72(t) 10-percent tax generally does not apply to that taxable conversion amount (A-7). Two independent five-year clocks apply: one before qualified tax-free distributions, and a separate one per conversion contribution for the 10-percent early-withdrawal tax (§1.408A-6 A-2, A-5).

## How a Roth conversion works

**Mechanics.** A conversion may be done three ways: (1) the owner takes a distribution from the traditional IRA and contributes (rolls over) it to the Roth IRA within the 60-day window of §408(d)(3)(A)(i); (2) a trustee-to-trustee transfer between the trustees; or (3) a transfer to a Roth IRA kept by the same trustee, including simply redesignating the traditional IRA as a Roth IRA ([26 CFR §1.408A-4 A-1(b)](https://www.ecfr.gov/current/title-26/section-1.408A-4)). Whatever the method, the converted amount is treated as a distribution from the traditional IRA plus a qualified rollover contribution to the Roth IRA (id. A-1(c)).

**Taxation at conversion.** Every converted dollar is includible in gross income for the taxable year it leaves the traditional IRA, except any portion that is a return of basis under §408(d)(1)-(2) ([§1.408A-4 A-7(a)](https://www.ecfr.gov/current/title-26/section-1.408A-4)). The taxable conversion amount generally escapes the 10-percent additional tax of §72(t), although later distributions from the Roth that are allocable to a recent conversion can trigger it ([A-7(b)](https://www.ecfr.gov/current/title-26/section-1.408A-4); [§1.408A-6 A-5](https://www.ecfr.gov/current/title-26/section-1.408A-6)).

**Post-conversion ordering rule.** Distributions from Roth IRAs are deemed taken first from regular contributions, then from conversion contributions on a first-in-first-out basis (includible-in-income portions first), and finally from earnings; all of an individual's Roth IRAs are aggregated for this purpose, so a withdrawal from one account draws proportionately down these shared buckets ([§1.408A-6 A-8, A-9(a)](https://www.ecfr.gov/current/title-26/section-1.408A-6)).

## Numbers & thresholds

| Item | Value / Timing | Citation |
|---|---|---|
| Modified AGI ceiling on converting (regulatory text) | $100,000 for the taxable year funds are paid from the traditional IRA | [§1.408A-4 A-2(a)](https://www.ecfr.gov/current/title-26/section-1.408A-4) |
| Filing-status gate | Married persons must file jointly; living apart the full year is the only carve-out, else conversion barred at any AGI | [§1.408A-4 A-2(b)](https://www.ecfr.gov/current/title-26/section-1.408A-4) |
| Income recognition | Full taxable conversion amount recognized in the year of distribution/transfer from the traditional IRA | [§1.408A-4 A-7(a)](https://www.ecfr.gov/current/title-26/section-1.408A-4) |
| Legacy 1998 spread | 1998 conversions were spread over four years (25% per year), available also where 1998 distributions landed in the Roth within 60 days ending after Dec. 31, 1998 | [§1.408A-4 A-8](https://www.ecfr.gov/current/title-26/section-1.408A-4) |
| Clock #1 – qualified distributions | Begins the first day of the taxable year of the individual's **first** regular or conversion contribution to any Roth IRA; lasts five consecutive taxable years; only one such clock per owner | [§1.408A-6 A-2](https://www.ecfr.gov/current/title-26/section-1.408A-6) |
| Clock #2 – early-withdrawal lookback | Separate 5-taxable-year period for **each** conversion contribution; distributions allocable to a conversion inside it owe the 10% tax on the taxable portion even if the money was already taxed, unless a §72(t) exception applies | [§1.408A-6 A-5(b)-(c)](https://www.ecfr.gov/current/title-26/section-1.408A-6) |
| SIMPLE IRA lockout | Amounts distributed during the two-year participation period of §72(t)(6)/§408(d)(3)(G) cannot be converted; SEP IRAs convert like any traditional IRA | [§1.408A-4 A-4](https://www.ecfr.gov/current/title-26/section-1.408A-4) |

## Exceptions & edge cases

- **Required minimum distributions block conversions:** If an RMD is due for the traditional IRA, the first dollars out each year count toward it until satisfied, and an RMD rolled into a Roth becomes a mere regular (excess-capable) contribution, never a conversion contribution ([§1.408A-4 A-6](https://www.ecfr.gov/current/title-26/section-1.408A-4)).
- **Employer-plan money must be moved indirectly:** Balances in §401(a)/§403(a) plans or §403(b) contracts cannot convert directly—only other IRAs can ([§1.408A-4 A-5](https://www.ecfr.gov/current/title-26/section-1.408A-4)).
- **Failed conversion fallout:** An invalid conversion not timely recharacterized under §1.408A-5 is re-treated as a regular Roth contribution (excise-taxable under §4973 above the contribution limit), loses any 1998 four-year spread, and faces the §72(t) additional tax ([§1.408A-4 A-3](https://www.ecfr.gov/current/title-26/section-1.408A-4)).
- **Election-out of the 1998 spread** had to be made on Form 8606 by the 1998 return's due date ([§1.408A-4 A-10](https://www.ecfr.gov/current/title-26/section-1.408A-4)).
- **Death, divorce, or separate filing mid-spread** accelerated or reshaped the remaining 1998-spread installments ([§1.408A-4 A-11](https://www.ecfr.gov/current/title-26/section-1.408A-4)).
- **Inherited accounts:** Each type of contribution passes to multiple beneficiaries pro rata, and a beneficiary's inherited Roth cannot be aggregated with the beneficiary's own IRAs (spouse electing ownership excepted) ([§1.408A-6 A-11](https://www.ecfr.gov/current/title-26/section-1.408A-6)).

*Scope note:* These sections explain that basis recovered under §408(d)(1)-(2) shrinks the taxable conversion amount ([§1.408A-4 A-7(a)](https://www.ecfr.gov/current/title-26/section-1.408A-4)) but do **not** spell out the cross-account traditional-IRA allocation mechanics popularly labeled the "backdoor-Roth pro-rata trap"; consult the full §408(d) and Form 8606 instructions for that computation.

## Sources

- [1] U.S. National Archives, Electronic Code of Federal Regulations — 26 CFR 1.408A-4 - Converting amounts to Roth IRAs · https://www.ecfr.gov/current/title-26/section-1.408A-4 · as of 2026-08-26
- [2] U.S. National Archives, Electronic Code of Federal Regulations — 26 CFR 1.408A-6 - Taxation of distributions from Roth IRAs · https://www.ecfr.gov/current/title-26/section-1.408A-6 · as of 2026-08-26