Roth Conversion before RMD
I had always believed that you cannot complete a Roth conversion before taking your RMD; however, I cam across the below article (linked below) which indicates that this only applies for Roth conversions completed via 60-day rollovers. If the conversion is done via a direct trustee-to-trustee transfer, the RMD does not need to be taken first. Is this clarified somewhere in the regulations?
https://irahelp.com/slottreport/clarifying-rollovertransfers-rules-when-rmd-due
Permalink Submitted by Alan - IRA critic on Mon, 2022-08-01 22:16
The link does not mention conversions, and they are treated differently from IRA to like kind IRA transactions. It does not matter how the conversion is done. All conversions are reportable on a 1099R because they are all two part transactions, a distribution and a rollover to Roth. Since a conversion is a distribution whether done by transfer or 60 day rollover, the RMD for the IRA source account must be completed before the conversion distribution to avoid the excess Roth contribution. On the other hand, if there is no conversion being done, just a change of TIRA account by direct transfer, there is no distribution done, no 1099R, and therefore no RMD has been distributed or rolled over. It’s confusing because some transactions that are physically done by transfer cannot be treated as non reportable transfers, and a conversion is one of them.
Permalink Submitted by [email protected] on Wed, 2022-08-03 15:36
Got it! Thank you!