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Ask Bob: Can I Do a Roth Conversion with My RMD?

A reader would like to increase her Roth IRA. Our expert explains what she can — and can't — do with her RMD.

Question

I have a traditional IRA that I will owe taxes when I take my RMD. Can I take the after tax RMD and convert it to a Roth? A Roth conversion?

Answer

I like your idea about getting additional money into your Roth IRA by converting your RMDs, says Adam Beaty, CFP®, EA, RICP, at Bullogic Wealth Management. “Unfortunately, you can never convert an RMD so once the dollars have been removed from your traditional IRA account, they must remain outside of your traditional and Roth IRAs,” he says. “If you plan to do Roth conversions when taking RMDs, the first dollars out of the account will always count as an RMD.”

“For example,” explains Beaty, “you have an RMD of $25,000. You can take out $40,000 from your traditional IRA, count $25,000 as your RMD and convert the remaining $15,000 to your Roth IRA. The $25,000 must remain in your bank account but you can convert anything additional.”

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Question

I have a traditional IRA that I will owe taxes when I take my RMD. Can I take the after tax RMD and convert it to a Roth? A Roth conversion?

Answer

I like your idea about getting additional money into your Roth IRA by converting your RMDs, says Adam Beaty, CFP®, EA, RICP, at Bullogic Wealth Management. “Unfortunately, you can never convert an RMD so once the dollars have been removed from your traditional IRA account, they must remain outside of your traditional and Roth IRAs,” he says. “If you plan to do Roth conversions when taking RMDs, the first dollars out of the account will always count as an RMD.”

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