RMD’s and Contribution Eligibility
Scenario – Individual is age 78, has earned income as owner of small business S Corp, contributes to company SIMPLE IRA, and is currently taking RMD’s from Traditional IRA.
Question – Can this individual still make a Traditional IRA contribution and then convert to ROTH IRA regardless of Taking RMD?
Thank you!
Permalink Submitted by Alan - IRA critic on Wed, 2021-03-03 19:09
Yes, Traditional IRAs no longer have age limits for contributions, but the contribution may not be deductible due to participation in the SIMPLE IRA. And if he does deduct the contribution, the deduction will offset future QCDs he may do up to the amount deducted. In addition, since he is subject to RMDs for both the SIMPLE and TIRA accounts, he must complete the RMD for the account that funds a conversion before doing the conversion. However, if he only plans to convert from the TIRA account, he only needs to complete the TIRA RMD before converting more from the TIRA. He could take the SIMPLE IRA RMD later.
Permalink Submitted by Kirk Halveland on Wed, 2021-03-03 19:55
Thank you Allan!