Greetings, What do you think? If I own an IRA Annuity with a GLWB rider, can I do a Roth conversion with the excess GLWB payment over the RMD amount? For example, My RMD is $25,000 at age 75 and my GLWB payment is $36,000. Can I do a Roth conversion of the $11,000 over the RMD amount? Thanks. Paul McG
While direct transfers are the way to move IRA money, in this case given that you are only doing one distribution a year, and you plan to convert the excess over the RMD, I would just do a 60 day rollover to the Roth. Conversions are not subject to the one rollover in 12 months limit, so no problem there. Of course, your taxable income will include both the RMD and the conversion, and the conversion could possibly expose you to IRMAA surcharges, or if below IRMAA income could result in taxation of more of your SS income, or increase your marginal rate. It all depends exactly where your total AGI, MAGI, or taxable income lands. Finally, if you rolled the excess over to a TIRA and not a Roth, the one rollover limit does apply there.
Permalink Submitted by Alan - IRA critic on Tue, 2021-02-02 19:49
You cannot figure the RMD amount yourself because annuities with alot of options tacked on have special valuation requirements, and only the life company can provide the RMD amount. But once you know the RMD, eg if it is 25k you can convert the additional amounts distributed to a Roth. You could also use the 11000 to satisfy the RMDs for any other IRAs you own as well under the IRA RMD aggregation rules.
Permalink Submitted by Paul McGillivray on Thu, 2021-02-04 12:21
I know you are right about the calculation. Lots of questions about the year-end valuation for RMDs. Do you need (or want) the IRA custodian to direct the excess over the RMD amount to the client Roth account? Maybe we can just roll it over, keeping our eye on the 60-day rules? Thanks for the insights. Paul McG