Roth conversion during the year I reach 72
I reach age 72 in August and understand my RMD will be based on the balance on Dec 31. Can I make a conversion prior to reaching my birthday or would an adjustment need to be made at Dec 31? Thanks for your help.
Permalink Submitted by Alan - IRA critic on Tue, 2021-05-11 16:06
Since this is an RMD distribution year for you, the first distribution taken anytime in 2021 must be treated as applying to your RMD, and you cannot convert your RMD. That means if you want to convert an amount this year, you must first complete your RMD and then you can convert additional amounts. Of course, this means that both your RMD and conversion will be in your 2021 taxable income. Also, you do have the option to delay your 2021 RMD to 4/1/2022 if you wish, but that would result in having to take 2 RMDs in 2022 and would also prevent a conversion prior to the RMDs. So this option is only beneficial if you have a large difference in other taxable income between 2021 and 2022, but thought I would mention it just in case you were not aware of it and it might be an advantage in certain cases.
If you take your 2021 RMD and also convert an additional amount this year, that will reduce your 12/31/2021 balance and therefore reduce your 2022 RMD.