TRADITIONAL IRA RMD/ROTH IRA CONTRIBUTION

Submitted by DAVID LUCK on Mon, 2019-10-14 20:44

I’m 66 years old and I’ve been retired for 10 years now. I have an old established ROTH IRA in a brokerage account that I have not contributed to since I retired. I also have a TRADITIONAL IRA in a brokerage account, and a regular brokerage account. I’m still a few years away from having to take a RMD from my TRADITIONAL IRA. When the time comes, can I just immediately transfer the RMD money to my ROTH IRA with the RMD for that year being satisfied to the IRS? If not, why not. The distribution has been taxed once, just like previous ROTH contributions and income. Or, do I have to transfer the TRADITIONAL IRA RMD first to a regular brokerage account, then contribute to the ROTH IRA. This does seem fair because the regular brokerage account money has already been taxed at lease once, and in most cases twice, if there are capital gains involved. Unsure of the rules and restrictions. Please help.

Thank You, David



Submitted by Alan - IRA critic on Mon, 2019-10-14 23:55

  • You cannot convert your RMD. A conversion is a distribution and rollover and an RMD can never be rolled over.
  • You CAN take your RMD first and then convert an additional amount. However, you will be taxed on both the RMD and the conversion. If you choose to convert an additional amount, the RMD must be completed first.
  • You CAN make a regular Roth contribution at anytime in an RMD year as long as you or a spouse has earned income. This is subject to the regular contribution limit, and is completely separate from the TIRA RMD.
  • Therefore, most retirees use the time between retirement and the start of RMDs or SS to convert when taxable income is low. Once RMDs begin at 70.5, you are also receiving SS benefits, so a conversion in those years will likely be taxed at a higher rate than before RMDs and SS begin.

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