Converting a 2009 RMD to a Roth IRA
I have a client who took a $10,000 RMD in Jan of 2009 before she found out that she didn’t have to (in spite of the fact that I sent multiple emails to my client list informing them of the RMD waiver). My question is can she convert those funds to a Roth IRA? It seems to me that this would fall under the 60-day rollover rule which means that she could not convert but I seem to remember Ed mentioning that there was a way around this for 2009 but I may be mistaken.
Anthony A. Saccaro, ChFC
Senior Benefits Financial Planning and Insurance Services
Los Angeles, Ca.
Permalink Submitted by Alan Spross on Sat, 2009-07-04 03:10
Anthony, you are correct that the conversion would have had to be done within 60 days of the distribution. Client can still convert, but it would have to be a different distribution, and then there would be two taxable distributions in 2009.
Most clients do not take RMDs that early in the year unless they need the funds. Several seniors were burned this year by IRA custodians who could not amend their systems in time to avoid automatic pre programed RMD distributions. If eligible for rollover, they could have rolled it back, or if not eligible converted it if within income limits. Perhaps you should arrange for her to wait in 2010 just in case Congress extends the waiver at the last minute, which they seem to be inclined to do.