RMD and Roth conversions
When you do a Roth Conversion for someone who is taking RMD’s does the amount of the Roth Conversion count as his RMD?
Example client is 92 and wants to convert $35K of Regualr IRA to Roth. His RMD is about $12K.
Does he have to take his $12K RMD first and then a seperat transaction on the $35K conversion or can we just convert $47K and let the $12 be counted as his RMD?
Thanks
Bill
Permalink Submitted by Alan - IRA critic on Wed, 2013-02-06 19:12
Bill,Client cannot convert 47k. The 12k RMD must be distributed to him and cannot be rolled over. At the same time or later, a conversion of 35k can be transferred to his Roth IRA. Note that if large LT care bills are expected it is best to convert less and pay those bills from the RMD or additional TIRA distributions. The LT care expenses can be deducted to offset much of the tax bill for the distributions. For converted funds, the tax money is gone.
Permalink Submitted by William Hammond on Wed, 2013-02-06 19:21
Thank you for your thoughtful reply.