Is it ok to take a required IRA distribution, with tax withheld, and put it directly into a ROTH?
My daughter asked me and I can't think of a reason it would not be ok.
My daughter asked me and I can't think of a reason it would not be ok.
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Last edited by Possi; 10-25-2006, 12:43 PM. Reason: to complete my question. I hit the wrong key the first time."I am proud to pay taxes in the United States. The only thing is I could be just as proud for half the money." Arthur Godfrey -
Can't do it
See Pub 590, page 26 near the bottom left. -
thanks
i'll go there right now and send her the link.
THANKS!"I am proud to pay taxes in the United States. The only thing is I could be just as proud for half the money." Arthur GodfreyComment
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not a conversion?
The distribution is made, taxes paid, and a separate check is written for the ROTH.
NOW is it legal?"I am proud to pay taxes in the United States. The only thing is I could be just as proud for half the money." Arthur GodfreyComment
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One question...
Just ask yourself... can the client make a Roth IRA contribution? If so, then it doesn't matter if the money that is used to make the Roth contribution comes out of their savings account or from a Trad IRA distribution.Originally posted by Possi
BillComment
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got it
thanks eversomuch..."I am proud to pay taxes in the United States. The only thing is I could be just as proud for half the money." Arthur GodfreyComment
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As long as he has earned income. See TTB 13-14 on conversionComment
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Why?
I'm assuming the RMD is because of age 70.5 - if so what kind of tax strategy is this? Is the whole objective to shield interest and dividends from taxation? At that age isn't this like pushing a rope up the hill with RMDs forthcoming?Comment
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No RMD on Roth
There is no RMD on Roth. So, why not continue to put $$ into Roth if the cash is not otherwise needed?? Any interest/appreciation made on the Roth would not be subject to tax. And if client doesn't need the cash, I'm betting that client has plenty of taxable income (from wages, investments, etc.) that could put them in a good tax bracket -- and, depending where they are income-wise, less taxable interest (had the money been put in a taxable account instead of a Roth) could increase the amount of Soc Sec that is taxable.Originally posted by Snaggletoof
BillComment
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RMD and Roth IRA
I take the required minimum distribution from a Rollover IRA and put $ 5,000 a year in a Roth IRA. If I needed the RMD for living expense, I could not do this. If I had no Earned Income, I could not contribut to a Roth.
However, if you qualify for a Roth, it makes no difference if you commingle the RMD money with money from your income from earnings, dividends, interest, capital gains, gambling, savings or any other source of fundsComment
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