KEY POINTS
  • If you completed a Roth individual retirement account conversion in 2022, your tax return may be complicated, experts say.
  • When figuring out your tax bill, you need to use the "pro-rata rule," which factors your pretax IRA funds into the calculation.
  • Experts say it's important to project your total income before converting funds in 2023.

If you made a Roth individual retirement account conversion in 2022, you may have a more complicated tax return this season, experts say. 

The strategy, which transfers pretax or non-deductible IRA funds to a Roth IRA for future tax-free growth, tends to be more popular during a stock market downturn because you can convert more assets at a lower dollar amount. While the trade-off is upfront taxes, you may have less income by converting lower-value investments.