Answer:
Yes. Any funds you convert during the tax year, other than amounts that represent nondeductible (after-tax) contributions to your traditional IRA, are treated as taxable income for that year. This means that if the contributions originally made to your traditional IRA were deductible, you may have to pay income tax on the amount converted to the Roth IRA. Also, although the premature distribution tax (for IRA withdrawals prior to age 59½) does not apply when you convert funds to a Roth IRA, it may apply if you later withdraw from the Roth IRA within five years after you convert funds. Finally, you cannot convert required minimum distribution amounts from a traditional IRA to a Roth IRA. Given the possible tax consequences of this conversion, you may wish to consult experienced tax and financial professionals before you commit to the process.
Note: You can also roll over (“convert”) funds from an employer sponsored-retirement plan to a Roth IRA. The same rules described above generally apply.
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