SEP to ROTH conversion question
I have a SEP and a ROTH IRA. Am thinking about converting some/all of the SEP to my ROTH account. I am 62 years old and have not started taking and distributions from either account. Since I am not ready to retire yet, I wish to keep my SEP account to continue saving for my retirement.
I read in Ed’s newsletter that you can convert an RMD to the ROTH 2020. Is there any advantage to performing a conversion using this method over a traditional conversion?
I believe that RMD’s can be taken at any time and doesn’t obligate you to continue taking RMD’s in the future.
Permalink Submitted by Alan - IRA critic on Tue, 2020-12-01 22:31
Your only option is a normal conversion because you are not subject to RMDs and even if you were, there are no RMDs for anyone for 2020. Your RMDs do not start until the year you reach 72, but if you take a distribution from the SEP (including a conversion) before then, it does NOT start RMDs. You can convert whatever amount makes sense, ideally at a tax rate that is lower or at least not more than what you estimate will be your marginal rate in retirement.