RMD

Submitted by Cherian Jacob on Wed, 2019-03-27 19:55

An example only:
1. RMD for this year is $20,000
2. Removed $20,000 for IRA (to satisfy RMD)
3. Withheld 25% for Federal Taxes, which equals $5,000
4. After subtracting Federal taxes ($5,000) from RMD ($20,000), that leaves $15,000

Question: Per IRS rules, can that $15,000 be moved to a Roth IRA or is that not allowed!



Submitted by Alan - IRA critic on Wed, 2019-03-27 20:11

  • No, an RMD is never eligible for rollover and a conversion contribution is treated as a rollover. However, a conversion can be done with an additional contribution after the RMD has been completed. For example, RMD of 20,000 has been completed and if a conversion of 15000 is desired the conversion can be done as a separate transaction. Total taxable income would then be 35000. 
  • Note that if you mess up the timing and convert the RMD in error,  which is always the first distribution in an RMD year, it produces an excess Roth IRA contribution which must be removed with allocated earnings.


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