Roth Conversions from IRA Annuity
I am currently receiving monthly guaranteed income payments from an IRA annuity via an income rider and not annuitization. Also, applicable taxes are being withheld from these monthly payments. I would like to start having the gross amount of these monthly payments deposited directly into my Roth IRA as Roth conversions and I would pay the applicable taxes separately to take advantage of the full conversion. Is what I’m proposing allowed?
Permalink Submitted by Alan - IRA critic on Thu, 2019-03-28 15:09
IRA withholding can always be declined, but if nothing is specified the default rate is 10%. If you can arrange for these monthly conversions, there won’t be a problem as long as you are not subject to RMDs. In any RMD year the entire RMD for a specific account must be completed before any additional amounts can be converted. Also, the one rollover limit does not apply to conversions or to direct transfers. You will have to keep track of these conversions to make sure any automatic arrangement does not result in more taxable conversions than you want since conversions are now permanent.