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March 5, 2013

Take RMD before Converting to Roth IRA


Only amounts that are rollover eligible can be converted or rolled over to a Roth IRA. Required minimum distribution (RMD) amounts are not rollover eligible. If you are age 70 ½ or older this year, and want to convert assets from other retirement accounts to your Roth IRA, make sure that your RMD amounts are taken before initiating the conversion to the Roth IRA. Leaving the RMD behind is neither a solution nor an option. If the RMD is not taken before the conversion/rollover occurs, then –technically- the conversion includes the RMD amount, thereby creating an ineligible conversion. It is important to note that only the RMD amount would be considered an ineligible conversion and not the entire amount.

Tip by Denise Appleby



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