Roth Conversion

[Hanover Jim]

If a client converts a Roth and wants to pay the taxes on his 2010 return are there any exceptions to the Underpayment Penalty? In other words if they convert in December must they pay a January estimated payment to avoid any penalty? They will not be using any of the converted amount to satisfy the tax liability.

[Kea]

If their 2010 withholding covers 90% of their 2009 total tax, they don't have to worry about the penalty. (Unless income is over a certain amount, then 100%) So, if your income "jumps" in one year, you don't get penalized for not paying in enough tax during the year.