Can ROTH Conversion done in 2016 be treated as part of RMD for this year?

Submitted by Harish Chandra on Wed, 2016-03-09 19:23

I converted a portion of my regular IRA into ROTH IRA acct early this year (2016) and will pay tax on the conversion amount when due. I am also required to take out certain amount from my regular IRA as RMD. If allowed, I would prefer not take out any more from my IRA this year, and am wondering if the ROTH conversion amount can be treated as RMD, or part of RMD for 2016. Thanks.



Submitted by Alan - IRA critic on Wed, 2016-03-09 19:47

  • Since your conversion is considered a distribution, the amount converted automatically is credited against the RMD. The problem here is that a conversion is also a rollover to a Roth IRA and you cannot roll over any part of your RMD. Therefore, up to the amount of your RMD the conversion is a “failed conversion” and is treated as an excess regular Roth IRA contribution. You should explain what happened to your Roth custodian and request that the excess amount be withdrawn along with an adjustment for earnings or loss on the excess amount. This will not cost you much, but it is messy to report all this on your tax return. At least you will not have to take out more from your TIRA account, but your conversion will end up to be less. I can clarify the reporting further if you provide the RMD amount and the amount you converted, Provide hypothetical figures if you would rather.

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