Spousal IRA Contributions and RMDs of Inherited IRAs: Today’s Slott Report Mailbag

Thursday, March 21, 2019

By Andy Ives, CFP®, AIF®
IRA Analyst
Follow Us on Twitter: @theslottreport

Question:

Is it possible to take the RMD portion of an inherited traditional IRA and convert that each year as the distribution is done into a Roth IRA?  Or, is the only way to accomplish this is to take the distribution and then make a contribution, which limits the amount I can put in each year?

Thanks,

Lynn

Answer:

Lynn,

No, RMDs from an inherited IRA cannot be converted to a Roth IRA. “Required minimum distributions” are just that, required. Whether from an inherited IRA or from an IRA by the original owner, they must be removed from the account. RMDs are considered to be the first money distributed from an IRA and are not eligible for rollover or for conversion to a Roth IRA. Like the RMD, dollars that remain in your inherited IRA after the RMD is taken are not permitted to be converted to a Roth, either. Of course, once those monies are removed (and if you are eligible), you can turn around and make a contribution to a Roth, but the RMD and subsequent Roth contribution will be two separate and distinct transactions. You will be limited by the maximum contribution limits to a Roth IRA – currently $6,000, plus an over-50 catch-up of $1,000.

Question:

I have retired. However, my husband is still working.  He plans to contribute this year to his Roth IRA and I would like to contribute the full amount allowed as a spouse.  Do I have to open a new “spousal Roth account” or can I contribute to my already existing Roth account? Does he have to write the check contribution or do I, since he is the one still employed

Caroline

Answer:

Caroline,

You do not need to open another Roth IRA for spousal contributions – they can continue to go into your existing Roth. As long as your husband has enough earned income to cover the 2019 contributions limits mentioned in Question #1 for both of you, the maximum amount can be contributed to both spouse’s Roth IRAs.

Either of you could write the check for the spousal contribution. It does not matter whose account the money comes from as long as you file a joint federal income tax return and are otherwise eligible to contribute to a Roth.

 

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