Roth Conversion of 2020 RMD

Submitted by Paul McGillivray on Mon, 2020-08-24 13:29

My client has taken their full 2020 RMD. They now want to do a Roth conversion of that amount. Sending the funds back to the original annuity company is quick and convenient but is it the only way? Can this client just go buy a ROTH Conversion IRA directly? Should they buy a traditional IRA in the RMD amount (calling it an IRA rollover) and convert that new IRA to a ROTH shortly thereafter? Thanks for any advice.



Submitted by Alan - IRA critic on Mon, 2020-08-24 14:28

  • Notice 2020-51 specifically requires that a returned 2020 would be RMD must be deposited in the distributing account, in this case the IRA annuity, and be completed by 8/31. However, if the distribution was in the last 60 days, they can do a normal Roth conversion directly to their Roth IRA. The one rollover per 12 month period does not apply to conversions.  Therefore, their options depend on when they received the most recent would be RMD distribution.
  • Since deadline is only a week away for roll backs of older distributions if that is the only option, client needs to act quickly. It is possible that some insurers will not even accept such rollovers.

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