Which statement is NOT correct about Roth IRA conversions?

The statement that you must have earned income to convert to a Roth IRA is not correct. Unlike contributions to a Roth IRA, which do require an individual to have earned income, the process of converting a traditional IRA to a Roth IRA does not have such a requirement. Anyone can convert their traditional IRA to a Roth IRA regardless of their earned income status. This is a significant distinction because it allows those who may not have current earned income, such as retirees or individuals with investment income, to take advantage of the benefits of a Roth IRA conversion.

In contrast, the other statements accurately describe the features of Roth IRA conversions. For instance, income taxes must indeed be paid on the amount transferred from the traditional IRA to the Roth IRA, as it is considered taxable income in the year of conversion. Additionally, amounts converted to a Roth IRA will grow tax-free, which is one of the primary advantages of a Roth account. Furthermore, there are no income limits regarding the modified adjusted gross income for conversions, allowing individuals regardless of their income levels to convert their IRAs.