Craig Wear, CFP®Craig Wear, CFP® | Expert in Roth Conversions & Tax-Efficient Retirement Strategies for IRA Millionaires

The Smart Way IRA Millionaires Pay Roth Conversion Taxes

18 Jan 2026 · 1 min

Watch on YouTube

1:14

A single-speaker YouTube segment by Craig Wear, CFP® explaining two approaches IRA millionaires use to pay Roth conversion taxes: (1) paying taxes with outside money (cash, brokerage sales, or redirected funds) and (2) withholding taxes from the conversion itself so the IRA funds pay the tax. The speaker argues paying taxes from outside the IRA is better because it leaves a larger Roth balance that compounds tax-free over time, illustrated with a plant analogy.

Chapters

Most IRA millionaires pay Roth conversion taxes one of two ways. They either pay the taxes with money outside the IRA cash savings account, a brokerage account, or maybe they sell an investment. Or they redirect money from somewhere else. Or they withhold taxes from the conversion itself, meaning the IRA money pays the tax. Both can work, but one option is better. Can you guess which one? Let's say these two plants are the same person. There's no difference here yet. But after our first year of taxes, things start to look different. The only difference is how the taxes were paid. The plant on the left, the taxes were paid from money outside the ira. The plant on the right, the taxes were withheld from the conversion itself, so it had a smaller starting amount. When you pay taxes from outside money, you're not being more aggressive, you're not taking more risk, you're not changing investments. You're simply starting the Roth bigger. Over time, the difference compounds. And remember, Roth growth is always tax free.