RMD amount was converted

Submitted by Brenda Murphy on Mon, 2020-03-09 17:14

I know now that my RMD is the first money out and is not an eligible rollover to a ROTH IRA. My RMD amount was $10,000. I have requested an excess removal from the ROTH IRA of $10,000 BUT the market is down and got less back. The question is… has my RMD been satisfied or do I need to take more from my IRA to make up the difference of the $10,000 excess requested and what I got back ($9,450)?



Submitted by Alan - IRA critic on Mon, 2020-03-09 17:43

  • You don’t have to take more out, just the earnings adjusted amount you received. Had their been gains, you would have received more than 10,000. 
  • This error is not costly from a tax standpoint, but is a hassle to report because your 1040 reporting will deviate from your 1099R form. Let’s say you converted 30,000 and your 1099R will simply show a 30,000 distribution, but since 10,000 was your RMD, you can only report a conversion of 20,000 on Form 8606. The other 10,000 is treated as a regular Roth IRA excess contribution, which is what you had removed less the earnings loss. A 5498 will be issued by the Roth custodian reporting a 30,000 conversion, which will be incorrect, but the 5498 will not be re issued.
  • Therefore, you need to attach an explanatory statement to your 1040 indicating what happened. For example, “I converted my 2019  RMD of 10,000 and had to treat this as a regular Roth IRA excess contribution. This excess less the loss on the excess contribution resulted in a corrective distribution of 9,450.”

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