The taxes paid on a Roth conversion – are they a distribution

Submitted by Regina Burks on Mon, 2022-12-05 20:28

Hi All! I’m wondering if the taxes paid on a Roth conversion are considered a distribution to be used for an RMD? I ask the questions knowing that if someone under 59 and 1/2 takes tax out when converting they can be penalized 10% on the amount of tax paid because it is considered an early distribution from the Traditional IRA. Since this is the case would the tax paid by someone over 59 and 1/2 also be considered a distribution, and thus be able to be counted towards the RMD? I understand that the amount converted can’t be the RMD, but the tax paid is not considered part of the converted amount. Thanks for all your thoughts!



Submitted by Alan - IRA critic on Mon, 2022-12-05 20:54

  • Both the amount converted and any withholding paid to the IRS are taxable distributions. In an RMD distribution year, if the RMD is not completed before the conversion distribution, the amount withheld will be applied to the RMD, and if the RMD is still not completed, the amount converted will be applied to the RMD as well. Since an RMD cannot be converted, any portion of the conversion applied to the RMD will have to be treated as an excess regular Roth contribution and removed from the Roth IRA.
  • Disregarding the conversion for a moment, many taxpayers subject to RMDs avoid quarterly estimates by taking their RMD and withholding  what is needed from the distribution. The amount sent to the IRS applies to the RMD just like the amount kept by the IRA owner.

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