First RMDs taken in different years
I will have 5 retirement accounts (one of which is my traditional IRA) from which I will have to start taking RMDs when I turn 70.5. Can I delay taking the RMD from the one that gives me the highest distribution till the following year before April 1 so that I can do a higher Roth conversion the first year and stay at a certain tax bracket?
Permalink Submitted by Alan - IRA critic on Wed, 2019-04-17 00:54
If you want to do a conversion in the 70.5 year, you must first complete the RMD for THAT particular IRA account, then you can convert as much as you wish from that same account. For the other 4 accounts, you can take as much in additional RMDs as you wish, and defer the rest to the following year by 4/1. While you cannot convert an RMD and the first dollars distributed from ANY IRA are deemed to apply to the total RMD under the RMD aggregation rules, there is a special rule that allows you to do a rollover (a conversion is a rollover) and not consider the distribution rolled over to be an RMD. See IRS Reg 1.408-8, QA 4. If your IRA account balances are not best aligned to take advantage of this rule, you can partition them by non reportable transfer, but this is best done in the year before you reach 70.5 so your RMD for each IRA account will be established. For example, the IRA account from which you intend to convert should have a balance large enough to fund the RMD for that account plus the amount you want to convert. You may have to read this post a few times, as this rule is not easy to understand, and is not well known.