How are taxes paid on a IRA to Roth IRA rollover

I have some a good amount of money saved up in a traditional IRA and wanted to wait until I got married (joint filing with a low income spouse) to roll it over into a Roth IRA, which I will be doing this year. My question is how are the taxes paid on a IRA to Roth conversion; is it paid out of the balance being rolled over, or do I need to pay the hefty tax bill with post tax earnings?

Retirement tax questions

You can do it both ways, however, if you pay the taxes out the money rolled over and are under 59 1/2 you will have a 10% early withdrawal penalty on that portion, as it would then be a withdrawal and a rollover.

One option you may want to consider is rolling over some each year, to avoid a large tax bite.  So maybe 20% a year for 5 years.  

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