When to pay taxes for pretax-to-Roth conversion?

[thesanjaysinha]

Hi,

Each year, I plan to convert my employer 401k pre-tax match to Roth 401k. I did so this year. 

When and how do I pay the taxes for this conversion?

Do I need to pay taxes the year following each conversion when I get the 1099-R, or do I need to make an estimated tax payment according to the following schedule?:

25% paid by 4/15/2021

42% paid by 6/15/2021

78% paid by 9/15/2021

100% paid by 1/15/2022

Thanks!

[macuser_22]

There is an automatic mandatory 20% tax withholding for 401(k) distributions but you can request that more be withheld if your marginal tax rate will be higher then 20%.     With withholding, estimated tax is not necessary.

[SteamTrain]

You should usually pre-pay the tax as an estimated -payment, by the end of the deadline for the quarter that the distribution is made.....especially if you convert it all and don't have any taxes withheld. 

(when I converted parts of my 401k to a Roth IRA (direct transfer), I could request no withholding, so that it all went into the Roth...but I also paid quarterly estimates separately to pre-pay the taxes ) 

Certainly, a lot depends on how much is converted.  $1000 is nominal and may not require any extra estimated payment  steps, but 5,000 or more starts to get more serious consideration

__________________________________________

Even if you do pay all that is needed in the quarter that  you convert, there can still be an  unexpected underpayment penalty show up in some of the automatic default calculations that are done.  that is less likely for conversions done, and estimated payments made in the first quarter, and more likely for conversions & estimated payments done in later quarters.  But even if a penalty does show up when you prepare your taxes, many times it can be eliminated, or sharply reduced by going thru the Underpayment Penalty interview in the software, where you can indicate in more detail exactly when all your income (and the conversion) and when  your payments were done, broken down by quarter.