Roth Contribution (not conversion) using IRA when RMD Age

Submitted by Brendan Ercole on Tue, 2024-02-06 15:04

Strange one for the group. Any help is much appreciated! Client is an accountant and was RMD age a few years ago. She continued to work and has a Traditional IRA and a Roth IRA. At her request she wanted to do a prior year Roth IRA contribution and use her Traditional IRA as the funding source. I understand that her RMD has to be satisfied first prior to a Roth Conversion but I can’t find any language anywhere about if the IRA distribution is used to fund a Roth IRA contribution. I guess the prior year part does not necessarily factor into this but the general question is does her IRA distribution that she uses to fund her Roth IRA contribution count towards her current year RMD? IE her RMD for 2024 is $10,000 and she does a $7,500 Prior Year Roth IRA contribution then is her remaining RMD for 2024 only $2,500? The custodian has counted it against her 2024 RMD but I know not to take that as the letter of the law. Thank you :).



Submitted by Alan - IRA critic on Tue, 2024-02-06 15:55

  • An IRA distribution can be used to fund a regular Roth contribution if the person has sufficient earned income. This differs from a conversion, which can be done without earned income and only after all IRA RMDs have been completed.  The conversion must come from an additional later distribution. RMDs are never eligible for rollover and a conversion is a rollover. 
  • Again, with 2023 earned income she is able to make a regular 2023 Roth contribution up to 4/15/2024 as long as her modified AGI is not too high for a Roth contribution. Roth custodians must code contributions as either regular contributions or conversion contributions. If a conversion is done and coded as such by the custodian, the RMD for 2024 must have been completed first and none of the 10,000 can be converted.
  • If RMD funds are converted, the RMD is still completed, but the converted RMDs money becomes an excess contribution to the Roth IRA and must be removed with allocated earnings.

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