Anyone, regardless of income, is eligible to convert his or her Traditional IRA into a Roth IRA. To do so, log into Betterment and select "Settings" from the menu and then "Accounts." To the far right of your Traditional IRA account, click the ellipsis button (...) and select "Convert IRA to Roth" and follow the prompts.
Note that you will not see the option to do this until your Traditional IRA has been funded. The wizard will guide you through the steps. (You can decide exactly how much to convert.) If you don't yet have a Roth IRA account, this process will create one for you.
Important things to note:
- If you would like to complete a conversion for the 2018 tax year, the IRS requires that the conversion completes by December 31, 2018. Please reference the Betterment Tax Calendar for more specific tax-related deadlines.
- Betterment does not withhold taxes for you, because it reduces the amount of money that can grow tax-free in your Roth IRA.
- Generally, any funds you convert from Traditional to Roth which were previously deducted will be subject to income tax. Since Betterment cannot provide specific tax advice, we recommend you consult a tax advisor and the IRS Publication 590.
Please note that if you live in Michigan, there are special requirements for completing your conversion.