RMD / Roth Conversion Sequence
I am performing Roth IRA conversions up to the (estimated) next IRMAA threshold. This will be the year I must begin taking RMD, unless Secure 2.0 unexpectedly changes the starting age to 73 for 2022. Assuming I have the following as of 12/31/21:
401k: $500K (retired)
TIRA (Broker 1): $1MM
TIRA (Broker 2): $1MM,
I believe that I must take RMD from IRA based upon the entire $2MM before performing any Roth conversions from either IRA. Is that correct or may I take RMD from only one brokerage account (based solely upon its $1MM content) and then make a Roth conversion from that account?
I also believe that I may take the appropriate RMD from the IRA and then perform Roth conversions from the IRA before I take my RMD from the 401k. Is that correct?
Thanks for all you do.
Permalink Submitted by Alan - IRA critic on Fri, 2022-01-28 14:51
Because the IRS Regs require you to complete the RMD “for that IRA” before rolling over an amount for that IRA, you could complete the RMD for one of the IRAs, then convert an additional amount from that same IRA before taking a distribution from the other IRA. That would allow you to complete your conversion before completing the RMD for the other IRA, perhaps several months before. If you had partitioned your IRA accounts prior to 12/31/2021 into IRAs with year end values of 1.7mm and 300k for example, you could complete a much smaller RMD for the 300k IRA, then convert as much as you wish from that same IRA, and postpone the large conversion till later.
Since 401k and IRA RMDs are independent of each other you could complete the 401k RMD anytime you wished during the year while executing your IRA RMDs as mentioned above.