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Old 03-25-2020, 06:09 AM   #21
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I wish we could still do this but we are in the RMD stage and unless I am wrong we can't do this anymore. Bummer!

Cheers!

I'm not an expert, but I see no reason you can't do Roth conversions while in the RMD phase. It is in effect a distribution above the RMD but goes into your Roth rather than your after tax account.
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Old 03-25-2020, 06:38 AM   #22
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I'm not an expert, but I see no reason you can't do Roth conversions while in the RMD phase. It is in effect a distribution above the RMD but goes into your Roth rather than your after tax account.
I agree. What you cannot do is use the RMD money to convert. What you can do is use the RMD money to pay the taxes on the conversion though.
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Old 03-25-2020, 06:47 AM   #23
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I agree. What you cannot do is use the RMD money to convert. What you can do is use the RMD money to pay the taxes on the conversion though.
Exactly. Many forget that the M in RMD stands for minimum. You can take as much more of a distribution as you like, and convert that to Roth, paying the taxes on it.
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Old 03-25-2020, 07:26 AM   #24
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No conversion for me this year... I decided to do 0% LTCG and take a bunch of highly appreciated equities off the table before they fell off the table and it used up all my headroom for 2020. Best laid plans....
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Old 03-25-2020, 07:38 AM   #25
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I did half of my conversion $ for the year over this past weekend. I will do the other half before year end.
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Old 03-25-2020, 07:47 AM   #26
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I did half of my conversion $ for the year over this past weekend. I will do the other half before year end.
Same here.....Only yesterday.
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Old 03-25-2020, 07:58 AM   #27
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I wish we could still do this but we are in the RMD stage and unless I am wrong we can't do this anymore. Bummer!


Cheers!
You can convert, but only after taking out the RMD and not converting that.
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Old 03-25-2020, 06:07 PM   #28
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I wish we could still do this but we are in the RMD stage and unless I am wrong we can't do this anymore. Bummer!


Cheers!
You can still do Roth conversions, but you must withdraw all your RMDs before you convert and you can only convert other funds besides the RMDs.
Therefore your total withdrawals will be the RMDs first and then the additional conversions.
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Old 03-26-2020, 04:34 AM   #29
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I agree. What you cannot do is use the RMD money to convert. What you can do is use the RMD money to pay the taxes on the conversion though.
This is great to hear. Thank you everybody.

I already made my RMD in early Feb for this year so my 2020 taxes will be high since it is based on tIRA from Dec 31, 2019 but as we approach Dec 31, 2020 if the market is still down enough so the RMD for 2021 will be lower resulting in lower taxes I may want to make some conversions then.
I think I have that right.



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Old 03-26-2020, 05:44 AM   #30
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A move from 24% to 32% increases your taxes by 1/3 for the additional amount. The market right now is about 1/3 of its peak value for equities. So you are saving 1/3 by converting at the lower current price, versus converting at the peak, but paying an extra 1/3 for the taxes. Convert $1000 at the peak for $240 or $667 (about the same number of shares) now for $213. Save $27 converting now into a higher tax bracket instead of at the market peak. Might be worth it.

I find I can't hit the top of the 22% bracket without going above $250k AGI and hitting the extra 3.8% healthcare tax, which would wipe out this small gain.
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Old 03-26-2020, 05:55 AM   #31
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You can still do Roth conversions, but you must withdraw all your RMDs before you convert and you can only convert other funds besides the RMDs.
Therefore your total withdrawals will be the RMDs first and then the additional conversions.
Not to pick nits, but are you sure that they have to be in a certain order? I would think that as long as the RMD is done in the calendar year that it needs to be done that it would be ok.

So for example, let's say I converted $x in January and did a withdrawal for the RMD in December.... what would be wrong with that?
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Old 03-26-2020, 05:59 AM   #32
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Not to pick nits, but are you sure that they have to be in a certain order? I would think that as long as the RMD is done in the calendar year that it needs to be done that it would be ok.

So for example, let's say I converted $x in January and did a withdrawal for the RMD in December.... what would be wrong with that?
My understanding is that the IRS considers the first distributions of the year to be RMDs until you reach the full RMD amount. So until you've taken out your full RMD amount you can't call any withdrawals conversions.

There is an exception made for QCDs, so you can take them out first, but I don't believe conversions can be made first.

I don't have full confidence in this, so I may be wrong, but I'm sure someone knows the law here.
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Old 03-26-2020, 06:50 AM   #33
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Actually, I found something on Ed Slott's website that clarified that you must do your RMD before any Roth conversions... so order is important.

Thanks.
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Old 03-26-2020, 07:06 AM   #34
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Actually, I found something on Ed Slott's website that clarified that you must do your RMD before any Roth conversions... so order is important.

Thanks.
That is a very good detail to remember. Thanks. When RMD time comes, I may take out the RMD in early Jan instead of taking it out automatically monthly. This keeps my options for conversions and other W/Ds open the rest of the year.
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Old 03-27-2020, 10:20 AM   #35
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Id do Roth conversion in done market. Also good time to harvest losses in taxable account if you reinvest in something similar, but different enough to avoid wash sale rules.
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Old 03-27-2020, 07:07 PM   #36
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Actually, I found something on Ed Slott's website that clarified that you must do your RMD before any Roth conversions... so order is important.

Thanks.
Since there will apparently be no RMD for 2020, it now sounds like probably you could just do the conversion at any time and that could be, if you want, your only distribution for 2020.
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Old 03-27-2020, 08:17 PM   #37
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And (I think, but not positive) that anyone who has taken their RMD less than 60 days ago can just deposit it into the Roth and make it into a conversion instead of an RMD. I would definitely do that instead of just eating the RMD.
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