Convert $100,000 to a Roth at 62 and Let the Custodian Withhold 22% for the Tax, and the Roth Gets $78,000. Pay the Tax From Savings and the Whole $100,000 Goes In, for the Same Tax Bill

For those who are unfamiliar, a Roth conversion moves money from a traditional IRA to a Roth IRA. The converted amount counts as ordinary income in the year you make the conversion. For someone who is 62, the key difference is how you pay the tax. There are two common ways, and while the IRS bill comes out the same either way, the Roth balance differs.

Consider a $100,000 conversion. If the custodian deducts 22%, then $22,000 goes to the IRS and $78,000 lands in the Roth. The other option is to convert the full amount and pay the tax out of a savings account. In that case, the Roth starts with the whole $100,000. Taxable income is the same in both versions.

Why Both Methods Produce the Same Tax Bill

The withheld money counts as part of the distribution from the traditional IRA and is taxed as ordinary income, along with the portion that reaches the Roth. Paying from savings only changes where the payment comes from. The taxable amount remains at $100,000 either way.

For savers under 59½, money withheld from an IRA draws a 10% penalty. At 62, that penalty no longer applies. Suze Orman made the point on her podcast: “Because you’re over 59 and a half, it’s moot. It doesn’t matter. The 10% penalty does not apply to you.” At 62, the cost of withholding shows up later, in a smaller Roth.

Where the $22,000 Difference Compounds

Let’s assume a 6% annual return over 20 years, which takes the account to age 82. At this return, a $100,000 Roth will grow to about $320,700, tax-free. A $78,000 Roth grows to about $250,200.

The withholding path does leave $22,000 in savings. If that money earns 6% but loses 22% of its gains to taxes each year, it grows to about $54,900. When combined with the Roth, the withholding path ends near $305,100, about $15,600 behind. The gap comes from annual taxes on money that could have grown tax-free inside the Roth.

Where the 22% Assumption Holds and Where It Breaks

The 22% figure is a withholding election. The actual tax is calculated on the return. When no election is made, custodians deduct 10% by default, according to IRS Form W-4R.

For married couples filing jointly in 2026, the 22% bracket covers taxable income from $100,800 to $211,400. That range is wide enough for joint filers. A couple with $100,800 of taxable income can add the full conversion and land at $200,800, which stays within the bracket.

Single filers have a narrower band, $50,400 to $105,700, covering only $55,300. A single filer converting the full amount in one year would push part of it into the 24% bracket. Wes Moss addressed this. He said on The Clark Howard Podcast, “Typically the right way to do Roth conversions is in chunks spread out over time.”

Why Age 62 Offers a Conversion Window

Medicare’s IRMAA surcharges are based on income from two years earlier. A conversion at 62 shows up on the income test for premiums at 64, a year before Medicare eligibility begins. Planners describe age 63 as the last point for conversions that remains outside that lookback (the quiet years between the last paycheck and required minimum distributions are the whole subject of our free Roth conversion guide, here). Orman lists Roth conversions among transactions that “affect your income and therefore your IRMAA.”

Social Security income adds a separate limit. Orman has warned that large conversions made right before taking benefits can cost more than they save. Her example was converting $50,000 annually while still earning other income. Before taking Social Security, conversions add to a smaller income base.

Steps Before Converting at 62

1. You can choose 0% withholding. That means paying from a taxable account. The IRS requires you to pay tax during the year through quarterly estimated payments or by increasing withholding from a paycheck or pension.
2. Sizing the conversion to fit the bracket. Joint filers can convert up to the $211,400 ceiling of the 22% bracket. Single filers reach the 24% bracket above $105,700, so splitting the conversion across two or more years keeps more at the lower rate.
3. The years before age 63. Conversions made then remain outside the IRMAA lookback and come before Social Security and required minimum distributions add income.

Paying from savings only makes sense when there is cash beyond the emergency fund. A retiree who would have to empty a cash reserve to pay $22,000 trades flexibility for tax-free growth. For that household, withholding is a reasonable backup, since at 62 it takes no penalty. Either way, the IRS collects the same tax, and the choice determines how much ends up in the Roth.

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