A Roth conversion is the process of moving funds from your Traditional IRAs to your Roth IRAs. The amount converted is taxed as ordinary income in the year of the conversion. Once in your Roth IRAs, the funds can grow and be withdrawn tax-free.
What are the benefits of a Roth conversion?
It can be beneficial if you expect to be in a higher tax bracket in the future:
Converted funds can be inherited tax-free.
Required minimum distributions (RMDs) do not apply to the converted funds.
Note: Roth conversions are not reversible. Please consult your tax advisor before proceeding.
How does a Roth conversion work?
To convert available cash from Traditional IRAs to Roth IRAs:
On the Crypto.com App home screen, tap IRAs from the main menu
Tap More > Convert to Roth IRAs
Enter the conversion amount
Follow the on-screen instructions to complete your transaction
To convert your stocks and ETFs, please contact our Customer Support team in the App. Roth conversion of crypto assets is not currently supported.
Tax withholding on Roth conversions is not supported in the Crypto.com App. Contact Customer Support in the App if you wish to withhold taxes during conversion.
Do I have to pay taxes for a Roth conversion?
Yes. The converted amount is added to your gross income for the year, which may increase your taxable income and potentially move you into a higher tax bracket.
Does the early withdrawal penalty apply to a Roth conversion?
No. The 10% early withdrawal penalty does not apply to funds converted in a Roth conversion.
Can I reverse a Roth conversion?
No. Since 2017, the option to reverse (“recharacterize”) a Roth conversion has been eliminated. Once you convert, it cannot be undone, so it’s important to consult your tax advisor beforehand.
If you have any questions, please contact our Customer Support team anytime on the Crypto.com App menu > Support > Contact Support. Our IRA Customer Support live chat team is there on Monday to Friday 8am - 6pm ET.