ROTH IRA Conversion using 20232 RMD
I wanted to make sure that I can use a 2023 RMD from a Traditional IRA to fund a ROTH IRA as a conversion. I know that we have to take the RMD first as we are going to journal the money to the established ROTH IRA. Since the client no longer has earned income, it would need to be labeled a conversion. Is this within RMD guidelines?
Permalink Submitted by David Mertz on Wed, 2023-11-29 16:07
A Roth conversion is deemed to be a type of rollover and rollover of an RMD is not permitted. A Roth conversion can only be done with other traditional IRA funds after the RMD has been satisfied. Of course the cash from an RMD could be used to pay the taxes on a Roth conversion, but with no earned income, the RMD itself is not permitted to be put into a Roth IRA.
Permalink Submitted by Denise Sowell on Wed, 2023-11-29 20:11
So, we can use the journal transfer as a 2023 ROTH IRA contribution using the client’s earned income.Thank you!