RadioBDC Logo
Grrl Power with Steph Mangan | RadioBDC Listen Live
 
 
< Back to front page Text size +

Take your Required Minimum Distributions (RMD) before converting

Posted by Andrew Chan  November 21, 2011 03:30 PM

E-mail this article

Invalid E-mail address
Invalid E-mail address

Sending your article

I have a Traditional IRA that I want to convert to Roth IRA. I am required to take an RMD from my Traditional IRA before the end of 2011. Can I avoid taking my RMD for this year if I convert before the end of the year?

No. If you are suppose to take a Required Minimum Distribution (RMD) from your Traditional IRA this year, you will need to take that distribution before you convert your Traditional IRA to a Roth IRA. Required Minimum Distributions are required by the IRS to prevent funds in your traditional IRA from being in a tax-sheltered vehicle indefinitely. In addition, RMDs are not allowed to be deposited or rolled over into another IRA. Therefore, once and RMD is made, it must remain outside of a tax sheltered vehicle like an IRA or Roth IRA.

If you mistakenly, convert your traditional IRA to a Roth IRA before you take your RMD, the amount of our RMD will be considered an excess contribution to your Roth IRA. Excess contributions are subject to a 6 percent penalty if not corrected in a timely manner. For more information on how to correct an excess contribution to your Roth IRA, visit the IRS’ web site at http://www.irs.gov/publications/p590/index.html.


This blog is not written or edited by Boston.com or the Boston Globe.
The author is solely responsible for the content.

E-mail this article

Invalid E-mail address
Invalid E-mail address

Sending your article

ABOUT MANAGING YOUR MONEY
Local finance professionals share insights and advice on issues such as budgeting, managing debt, and retirement planning.

About the contributors

D. Abraham Ringer is a CERTIFIED FINANCIAL PLANNER practitioner and a Financial Adviser with Morgan Stanley Global Wealth Management in Boston. He is registered in MA, NH, NY and several other states to which his articles are directed. For more information please visit www.morganstanleyfa.com/ringer
Financial Planning Association™ of Massachusetts has 900 members who specialize in the financial planning process. Many of its members engage in philanthropic pro bono work in their communities, recommend legislation, elevate public awareness, promote financial literacy, and advocate for sound economic and tax policies.
Odysseas Papadimitriou is the founder of CardHub.com, a credit card and gift card marketplace, and WalletHub.com, a personal finance site. He has more than 13 years of experience in the personal finance industry, and previously served as senior director at Capital One.

E-mail your question

Name:
E-mail:
Your question/comment:
archives