Function

• Traditional IRA contributions are "pre-tax," meaning you can deduct them from your income if you are eligible. Roth IRA contributions are "after-tax," so you must pay income taxes on them. The year you convert to a Roth IRA, you must pay income taxes on the tax-deductible portion of your traditional IRA.
  
  

Considerations

• You do not owe income taxes when you convert taxable traditional IRA contributions to a Roth IRA. For instance, if you were ineligible to deduct a traditional IRA contribution because you made too much money in a given year, you need not pay income taxes on that amount.
  
  

Features

• When you convert your traditional IRA, you may either move it to a new account with your current trustee or transfer it to a new financial institution. If you decide to switch trustees, you can take a penalty-free distribution from your old account as long as you redeposit it within 60 days. Alternatively, you can ask your current trustee to directly transfer the funds to you new trustee.