2022 RMD from conversion annuity to roth

Submitted by Charlie Pesiridis on Fri, 2023-03-24 22:47

A client must take their 2022 RMD, roughly $500, leaving a residual balance of less than the RMD amount in the account’s cash value. There should be no conversion costs/fees associated with changing it to a Roth IRA from a variable annuity in a Traditional IRA. If a conversion was to happen, the client would still have cash value, and the death benefit would not be affected. Going from a Traditional to a Roth sounds like a suitable/compliant option.

The main concern is that if it stays in a pre-tax IRA, then would RMDs be required?
Further, depleting the cash value and thus affecting the death benefit and canceling the product?



Submitted by Alan - IRA critic on Sat, 2023-03-25 00:05

  • Was the 2022 RMD missed, or is 2022 the first RMD year for which the RMD can be completed up to 4/1/2023?
  • Any conversion done before the RMD is completed for all IRAs (including IRA annuities) is treated as a failed conversion up to the total remaining RMD and therefore an excess Roth IRA contribution. Client should be careful to avoid creating an excess IRA or Roth IRA contribution that cannot be easily corrected due to total annuitization of IRAs. 
  • If an IRA is annuitized, the annuity payments that year count toward the RMD, but if there is no IRA left that is not in the IRA annuity, the RMD for the year must be completed before annuitizing. 
  • RMD 

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