- You may have to pay income taxes now on conversion amounts that were previously deducted from your income. Betterment will not withhold these funds for you.
- The taxable portion of a converted amount will be added to your adjusted gross income for the year, and could potentially increase your tax bracket overall.
- Taxpayers with incomes or an adjustable gross income (AGI) over $200,000 who file individually, or $250,000 for married couples filing jointly, could be subject to a 3.8% tax on income from interest, dividends, annuities, royalties and rents which are not derived in the ordinary course of trade or business. Exceptions apply. Read more about the tax.