RMD from Roth IRA converted from IRA?

Submitted by Ronald Birnbaum on Wed, 2017-06-07 18:48

WE had an IRA in force in 2016. In March of 2017 we converted it to a Roth IRA. Now there will be no further RMDs as it’s a ROTH, but it was an IRA in December of 2016, so do we still owe an RMD on that IRA which was now converted to a ROTH in 2017?

Thanks.



Submitted by Alan - IRA critic on Wed, 2017-06-07 19:28

  • The distribution for the conversion satisfied the RMD for this particular IRA. However, an RMD is not eligible for rollover and a conversion is a rollover. Therefore, the RMD amount is an excess contribution to the Roth IRA and must be removed from the Roth IRA with allocated earnings. You must tell the Roth custodian that you converted your RMD, give them the amount of the RMD and ask them to remove it with allocated earnings. You will owe tax on the earnings. This answer assumes that you do not have any other non Roth IRA accounts. If you do, please advise how you handled the RMD from the other account.
  • For tax reporting of the above occurrence, you would not report the RMD portion on Form 8606 as a conversion, just the amount you were allowed to convert. You would also report the corrective distribution on line 15 of Form 1040 and the earnings that were removed on line 15b along with the amount of the conversion that was allowable.

Submitted by Ronald Birnbaum on Wed, 2017-06-07 20:30

We have two IRA rollovers that we will take RMDs from this year.   They are not due yet and we haven’t taken any withdrawals yet.  How does this effect the directions you gave in your message?  THanks.

Submitted by Alan - IRA critic on Wed, 2017-06-07 21:14

You can proceed with the RMDs from these other IRAs as you planned since you have not taken any distributions from these accounts in 2017. Had you by chance completed your total RMD for all your IRAs before you did the conversion, then the entire conversion would be OK and there would not have been an excess contribution. At present you have only completed the RMD for the IRA you converted, so the RMDs for the others are still due by the end of the year. 

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