RMD then Roth Conversion
Can you take your RMD and put it in your Roth (if you don’t need the money right now). OR can the RMD only be converted to other investment vehicles (529, taxable brokerage, etc), and an ADDITIONAL amount (NOT your RMD) could be converted from your TIRA to a Roth after meeting your RMD requirement. Help!
Permalink Submitted by Alan - IRA critic on Thu, 2025-01-09 20:51
The total RMD for all IRAs must be completed before converting any amount. First distributions are automatically treated as RMDs, and if one of them is converted, it produces an excess contribution to the Roth IRA because RMDs cannot be rolled over.
That said, the IRS does not usually become aware of this type of infraction because the actual dates of the RMDs and conversions are not reported to the IRS.
Permalink Submitted by Gerri Fehst on Fri, 2025-01-10 18:26
But the question is must RMDs be considered distributions separate and apart from Roth conversions? For example, in this hypothetical, say you have one only one TIRA and you then have only one RMD to take. When you take your RMD can you put that RMD (convert it?) straight into your Roth? OR
must RMD distributions be completed and THEN if you still want to make a conversion you take additional new money from the TIRA and convert that additional new money to your Roth?
Permalink Submitted by Alan - IRA critic on Sat, 2025-01-11 15:00
The latter. The RMD must be completed first and RMDs are not eligible for rollover. A conversion is a two part transaction (distribution + rollover to Roth), and can only be done after all RMDs for all IRA accounts has been completed. That means the taxpayer would owe tax on both the RMD and the conversion, so many retirees find that conversions are best done prior to the RMD years, and in some cases also prior to receiving SS benefits.
Permalink Submitted by Gerri Fehst on Sun, 2025-01-12 22:33
Thank you so much for that clarification. I was getting different advice from my otherwise reliable CPA. He was saying the RMD could be directly rolled over, which would have meant taxes only on the RMD, and that just didn’t seem right.