ROTH conversion and first IRA RMD

Submitted by Philo ZRock on Tue, 2019-12-17 20:19

Next year I will be 70 1/2 and will be able to postpone my first RMD from both my tIRA and tax deferred annuity until March 31, 2021.
If I intend to wait until 2021 to take my first RMD, am I allowed to make a Roth conversion In 2020?
Thank you.



Submitted by Alan - IRA critic on Tue, 2019-12-17 20:43

  • Under current law, you cannot convert in 2020 without taking your 2020 RMD first. The reason is that the first distribution you take in an RMD distribution year is applied to your RMD. So if your only distribution in 2020 was a conversion, you will be converting your RMD and that is not allowed because a conversion is a rollover and you cannot roll over any part of your RMD. If you want to convert an amount in 2020, you must complete your 2020 RMD first and then convert an additional amount.
  • That’s under current law, but if the current budget bill is signed into law (as is highly likely), then your first RMD distribution year will not be 2020, it will be the year you reach 72, whether that is 2021 or 2022. In that case, you can convert in 2020 without concern about your RMD since 2020 would then not be an RMD distribution year. 
  • To be clear, if you want to delay your first RMD to the following year, you can do so but the first year is still a year FOR WHICH you must take an RMD, known as an RMD distribution year. Any distribution you take in that first year, being a conversion or whatever must be applied toward the RMD for that year, therefore your RMD is not deferred to the second year at all unless you take NO Distribution in the first year. You may need to read this a couple times, since the concept can be confusing.

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