My RMD & younger spouse Roth conversion?

[thatguy]

I'm thinking now might be a good time to do a Roth conversion. I know my RMD has to be done first. I'd rather wait and do the RMD later.

Younger wife doesn't need to do RMD yet. Wife could start a Roth and convert in to it, right? Is there any need for me to take my RMD before younger wife does a Roth conversion?

When I get around to doing my RMD I can withhold enough tax to cover the conversion

 

[SevenUp]

1) Right, from her own traditional IRA.
2) No.

 

[thatguy]

1) Right, from her own traditional IRA.
2) No.

From her 401k. IRA is small.

 

[SecondCor521]

From her 401k. IRA is small.

You can do a 401(k) -> Roth IRA rollover per the IRS at https://www.irs.gov/pub/irs-tege/rollover_chart.pdf. I think it's much less common than 401(k) -> traditional IRA -> Roth IRA, so it would be wise to be very clear with her 401(k) provider about what you're doing so that they code the 1099-R correctly for you next January.

Before starting you might want to make sure her 401(k) plan permits such a rollover as well. They probably do, but no sense wasting your time starting down a path that isn't possible.

 

[SevenUp]

Before starting you might want to make sure her 401(k) plan permits such a rollover as well. They probably do, but no sense wasting your time starting down a path that isn't possible.

+1

Conversions from an IRA can be done at any age, with any employment status, and for any amount.

Conversions from a 401k depend on both IRS law and company-specific rules, and can depend on age, employment status, and amount.

It's quite possible she can do a direct 401k->Roth IRA conversion for a specific amount, but not guaranteed.

 

[thatguy]

There's no reason for me to expect that DW's 401k does not allow a Roth conversion.
Either way I can still do one. I've done small 401k to Roth conversion for several years.
Her 401k is a bit larger than mine. We retired at 57 & 55 but not at the same time cus I'm 11 years older. She had more contribution years.

It's apparent we should convert more. Tax rates likely could go up in 2026. DWs social security has to start in 2025, and RMD in 2027.

 

[SevenUp]

There's no reason for me to expect that DW's 401k does not allow a Roth conversion.

Some 401k plans don't allow partial withdrawals after retirement - it's either all or nothing.

If you are both retired, then you probably aren't concerned with using the backdoor Roth process so at worst she could roll the whole 401k to an IRA and convert from there.

But yes, there is a reasonable chance her 401k allows partial withdrawals direct to a Roth IRA. That's what Megacorp's plan at Fidelity allows, and we have been doing so.

 

[Exchme]

Even if they won't do a direct conversion, it just means it's a two-step process. You set up a traditional IRA at your favorite brokerage and then move the money from the 401K to the IRA. Once in the IRA, then convert to Roth. That's what we had to do with DW's. We were moving it to Vanguard and it looked like you could do the move to the IRA on-line, but turned out not from that particular 401K, so we had to call them. Still pretty painless.