IRA RMD’s and Partial IRA to Roth Conversions
A person takes his full RMD from his IRA in March, 2020 and then does a partial conversion from his IRA to his Roth IRA by transferring stock from his IRA to Roth IRA in March 2020 and now wants to reduce the amount of withdrawals from his IRA by putting cash back into his IRA in order to reduce his tax obligation for 2020 which might be allowed under the CARE Act. Can this person just put cash back into his IRA to reduce his taxable withdrawals in 2020 with no further consequences? Would he need to be careful to still have withdrawals from his IRA at least equal the RMD for 2020?
Permalink Submitted by Alan - IRA critic on Tue, 2020-04-07 21:35
There is no 2020 RMD, therefore he can do a 60 day rollover (unless he has used up his one allowed rollover in the last 12 months) of the amount he took as his RMD that turned out not to be an RMD after all. If he distributed cash for the first distribution, then he must roll back cash. If he took an in kind distribution for the first ditsribution, then he must roll back the same shares that he distributed. However, the conversion is set in stone, so will still be taxable. He does NOT have to distribute any particular amount in 2020 since there are no RMDs. Think of this as a pre RMD year where he decided to do a conversion and also distributed an additional amount that is eligible for rollover.