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Can a rollover from a Traditional IRA to a Roth IRA save you money on my taxes?

When you take funds from one retirement account and transfer them to another, that’s known as a rollover.

Go to this section in Credit Karma Tax: Traditional & Roth IRA Contributions

When you roll over a retirement plan distribution, you generally don’t pay tax on it until you withdraw it from the new plan. However, any untaxed amounts in a traditional IRA that are rolled over into a Roth IRA (called a conversion) will be taxed. This is because a Roth IRA is funded with post-tax income so you would need to pay taxes on pre-tax amounts converted into a post-tax retirement account.

The modified AGI limits for contributions change annually, check with the IRS for the limits that apply to your situation in Publication 590-A, Contributions to Individual Retirement Arrangements (IRAs).

As a result of the Tax Cuts and Jobs Act of 2017 (2017 tax reform), you will see some changes in 2018:

  • The rollover period for certain plan loan offsets has been extended for 2018 and later years. You will have until the due date (including extensions) for your tax return for the tax year when the offset occurs to roll over a qualified plan loan offset amount.
  • You cannot recharacterize Roth conversions made in 2018 or later. A conversion of a traditional IRA to a Roth IRA, and any other eligible retirement plan rollovers to a Roth IRA, made after December 31, 2017, cannot be recharacterized as having been made to a traditional IRA.
    Source: irs.gov
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