So just increase the withholding from IRA to cover the taxes on the conversion seems like reasonable solution. If we increase the withholding from the monthly withdrawals, when would be the best time to do conversion? quarterly? yearly?As said above, you won't get a penalty, but you may need to fill out form 2210-AI to avoid it because an estimated tax payment showing up in December or January violates the four even estimated tax payments method the IRS wants you to use. The IRS is afraid people wouldn't pay taxes evenly throughout the year via estimated tax and just lump it all in December or January. So the Form 2210 is what you use to prove you actually had a tax significant liability in December and that is when the payment needed to be made instead of earlier the year. That form could be easy or hard depending on your situation.
There are better ways, such as increasing withholding on a pension or any paychecks you are receiving as they are considered timely. Or taking an IRA or 401K distribution and having tax withheld, but this gets more complicated if you don't want to pay the tax via an IRA or 401K (you can put the money back from taxable via an indirect rollover, but that has some pitfalls -- there are multiple threads here describing it). Using withholding can also be easier than you think if you understand the safe harbor rules and only need to withhold a minimal amount to keep you in a safe harbor.
If you know about how much you want to convert and can make a pretty good guess at your tax liability now and you think form 2210-AI will be a pain, then I would just do your conversion now (or some time between now and early April). Paying all of your estimated tax in the 1st quarter (by April 15th) is not a problem. Paying it all in December can be an issue.
thanks
Statistics: Posted by charles99 — Wed Feb 18, 2026 4:10 pm — Replies 15 — Views 444