Share transfer from Traditional IRA to Roth IRA

Submitted by David Snelson on Mon, 2022-09-19 20:41

Is it allowed to Transfer shares form a Traditional IRA account to a Roth IRA account and qualify as an RMD from the Traditional IRA? Of course, the value of the shares transferred would be a taxable as a distribution.



Submitted by David Mertz on Mon, 2022-09-19 21:35

  • Not allowed.  A transfer of funds (either cash or in-kind) from a traditional IRA to a Roth IRA is a Roth conversion.  A Roth conversion is defined in the tax code as a taxable distribution from the traditional IRA and a rollover to the Roth IRA.  Because RMDs are not eligible for rollover, the RMD from the traditional is not permitted to be transferred to the Roth IRA as a Roth conversion.  The RMD must be distributed to the participant and then any other amounts can be converted from the traditional IRA to a Roth IRA either by cash or in-kind.
  • Further, an RMD distributed in-kind is not permitted to be deposited in-kind into a Roth IRA as a new Roth contribution because new Roth contributions must be cash contributions.

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