Retirement tax questions

Okay, that's good to know! 

So, if I understand correctly, this is what it looks like:

1) pay federal tax (20%) for $17,000 now. In this case, I pay $3,400 from the fund, so the actual transfer amount is $13,600 into Roth IRA. 

2) pay the tax later. In this case, $17,000 is in Roth IRA, and it will be added to my annual self-employed income (12% tax bracket for now) and pay the tax in this bracket, not in the 20% bracket. 

3) Once the fund is in Roth IRA, it will grow tax-free without me having to worry about the so-called underpayment penalty.