TIRA convert to RIRA with same company
Merry Christmas!! I have a $46K TIRA and a RIRA ($22K) with same company. I want to convert TIRA to RIRA. As I understand the situation I must 1st withdraw the RMD (based upon $46K) and then convert the remaining balance (in full, or do a partial). I will be 73 in April. I also receive a lifetime income benefit annually from another company, the amount of which has covered my rmd allocation for the last couple of years. My only other source of income is social security. I will need to work the figures to determine if a partial or total conversion would be best. However this will not be immediately possible due to the uncertainty which prevails in D.C.. For many reasons it was not feasible for me to attempt this during 2012, although tax-wise it would have been better. I know taxes will be due on both rmd and conversion, and because of lib, social security taxes may be at 85%. Any suggestions/thoughts would be greatly appreciated.
You ‘guys’ do a terrific job helping all of us. Thank.
brndflc
Permalink Submitted by Alan - IRA critic on Mon, 2012-12-24 18:37
Not sure I understand your annuity product. Is it a defined benefit pension or perhaps an IRA annuity? You are correct that your RMD must be completed for all your IRAs before converting and this is tricky if you have an IRA annuity paying monthly, but you already have received the 2012 distributions so if you want to convert, you can still do that for 2012 since your RMDs are probably now satisfied. That said, taxation of SS benefits may increase the cost of your conversion and therefore it would not benefit you to convert unless your future reduced RMDs as a result of converting saved you on SS taxation in the future. You could experiment with this program with various conversion scenarios to determine the cost of a conversion for 2012:http://turbotax.intuit.com/tax-tools/calculators/taxcaster/