Pension & Roth Conversions
Hi, if you have a pension, do monthly pension payments affect the timing of your eligibility to make a Roth Conversion? In the case of a lump sum pension deposited into a 401(k) or IRA, the entire RMD for a year must be taken before you are eligible to make a Roth Conversion, but I’m guessing that monthly pension payments are not a consideration for Roth Conversion eligibility, is that correct? Thank you.
Permalink Submitted by Alan - IRA critic on Fri, 2023-11-24 15:54
A monthly pension paid over a single or joint life expectancy is not an “eligible rollover distribution” per IRS Reg 1.402(c)(2), QA 4. That means it cannot be rolled over to either an IRA or Roth IRA. It also means that the pension is not subject to mandatory 20% withholding.