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John Urban spent his career in enterprise software. He co-founded GT Nexus, a supply-chain network acquired by Infor in 2015. When he retired, he ran into a gap: plenty of tools project your finances out over decades, but almost none help you decide what to actually do this year, with taxes in mind. He built RetireSmartIRA to close that gap, a retirement tax-planning app for people managing Roth conversions, RMDs, IRMAA, and the handful of thresholds that quietly decide how much of their savings they keep. He lives in Northern California with his wife, Kathy. When he isn't modeling tax cliffs, he's usually spending time with old friends, reading, following Bay Area sports, or looking for a good bottle of wine.
Comments
Grant - Thanks for the reply. If I understand your process correctly, my observation would be: The Step 2 distribution came out of a Traditional IRA. Roll it back into a Traditional within 60 days with brokerage cash and it's a tax-free wash. Roll it into the Roth instead and it's a Roth conversion, fully taxable, because you've moved Traditional money into a Roth. So the "tax money" doesn't pay the tax. It becomes an extra conversion equal to the tax, which means a $100,000 conversion you thought you did is actually $130,000. And that overshoot is the whole risk: if you sized the $100k to stay under a bracket or IRMAA threshold, the real $130k blows through it.
Post: Don’t Let a Roth Conversion Trigger a Penalty
Link to comment from July 12, 2026
Post: Don’t Let a Roth Conversion Trigger a Penalty
Link to comment from July 12, 2026
Rick - Thank you, and that's a valuable view from your AARP work. It's really wonderful that you do volunteer work for folks that need your help!. Best - John
Post: Don’t Let a Roth Conversion Trigger a Penalty
Link to comment from July 12, 2026
luigi767 - Nice real-world confirmation. Thank you for adding your experience to the discussion - John
Post: Don’t Let a Roth Conversion Trigger a Penalty
Link to comment from July 12, 2026
Jeffrey - well put, and I agree with all of it. Withholding is the safe, low-effort route; equal estimated installments against a safe-harbor target are next; and bunching into Q4 works but really does mean getting comfortable with Form 2210 and Schedule AI. For anyone going the annualizing route, your advice to loop in a CPA is exactly right — it's workable, but it's not a form to meet for the first time under an April deadline. Thank you for adding this. - John
Post: Don’t Let a Roth Conversion Trigger a Penalty
Link to comment from July 12, 2026
Ormode - you're right that annualizing on Schedule AI is a legitimate way to handle a Q4-loaded year, and I could have been clearer that the "pay in January and you're not square" line describes the default equal-installment method, not the only option. If your income genuinely lands in Q4, Schedule AI lets you show that, and a timely Q4 estimated payment can avoid the penalty. The reason I steered toward withholding is exactly the Form 2210 and Schedule AI work you're describing. Withholding is treated as paid evenly across the year automatically, so it gets you the same result without annualizing and without reconstructing income quarter by quarter. Two valid paths — I was recommending the one that skips the paperwork, not saying the other doesn't exist. I do appreciate you making this clearer. - John
Post: Don’t Let a Roth Conversion Trigger a Penalty
Link to comment from July 12, 2026
Mike - Great question. Getting a refund doesn't make your prior-year tax zero. The prior-year safe harbor keys off the total tax on your return — the total-tax line — not the balance you owed or the refund you got. If you had, say, $18,000 of total tax but $20,000 was withheld, you got a $2,000 refund, but your prior-year "tax" for safe-harbor purposes is still $18,000, not zero. There is a real zero exception, but it's narrower than a refund: if your actual total tax last year was truly zero — no liability at all — and you were a U.S. citizen or resident for the whole year and the year covered 12 months, then there's no underpayment penalty this year, period. 100% of zero is zero, exactly as you say. - John
Post: Don’t Let a Roth Conversion Trigger a Penalty
Link to comment from July 12, 2026
Thank you!
Post: Don’t Let a Roth Conversion Trigger a Penalty
Link to comment from July 9, 2026
Thank you!
Post: Don’t Let a Roth Conversion Trigger a Penalty
Link to comment from July 9, 2026
Andrew, you and DrLefty have it right. Good catch on the wording. There are two safe harbors, and the sentence you flagged only holds for one of them. The prior-year safe harbor is a fixed target: 100% of last year's tax, or 110% if your prior-year AGI was over $150,000. That number is set the moment last year's return is filed. A big Q4 conversion does nothing to it. If you are covering that target, you are penalty-proof no matter how much income you add this year. You may owe a large balance in April, but no penalty. The current-year safe harbor is the one that moves. It is 90% of this year's tax. A large Q4 conversion raises this year's tax, which raises the 90% target, which is the cushion I was describing getting eaten into. So the withholding trick earns its keep for someone leaning on the current-year test, or someone who does not have a clean prior-year figure to point to (first year of retirement, prior-year income much lower, that kind of thing). I should have named which safe harbor I meant in that line. Most people in the conversion-planning situation are best served by the prior-year target precisely because it is immune to the spike. Thanks for asking for the clarification. - John
Post: Don’t Let a Roth Conversion Trigger a Penalty
Link to comment from July 9, 2026