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In 1998, I converted as much of my traditional IRA's as I could afford to pay the taxes on to a Roth IRA. I understand the logic of not converting if you have to use Traditional IRA money to pay the taxes on a conversion. However, as one approaches age 70 1/2 and mandatory withdrawls are approaching, then why not withdraw from the Traditional, use whatever money is required to pay the taxes on the withdrawl, and roll the rest into the Roth IRA? It would seem that there is a trade-off as to how many years in advance of mandatory withdrawls that one should begin a systematic rollover from Traditional to Roth.

I'm probably just the victim of my own fuzzy thinking here, but I'd sure like to hear some comments.

Please email me your comments, as well as responding here, since I don't get to check these message boards all that often. Thanks.
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Your plan sounds reasonable to me. You do need to be in your Roth for 5 years before you can begin withdrawals. That would mean you have to make the conversion before age 65-1/2.
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I may be confused but I think I saw "double usage" of the same money here.

I don't believe the minimum withdrawal from a Traditional IRA is available for conversion to a Roth. They are withdrawal funds. However, if you have earned income of at least $2,000/year and are within the AGI limits, you may use up to $2,000/year of the withdrawal proceeds for a Roth contribution.
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Your decision as to when to convert depends on whether the conversion amount affects your tax bracket and on whether you need the money placed in the Roth in less than five years. My strategy is to wait until age 69 and then convert to a Roth provided I stay in the 28% bracket. Otherwise begin to convert some of the IRA in prior years. Also remember that if you have a 401K in any substantial amount it will also need to be converted to an IRA (again depending on the effect on your tax bracket). If some funds remain in a regular IRA you will have to withdraw based on actuary tables in IRS Publication 590 (I think that's the right number).
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Greetings, GrayFox35, and welcome. You wrote:

<<In 1998, I converted as much of my traditional IRA's as I could afford to pay the taxes on to a Roth IRA. I understand the logic of not converting if you have to use Traditional IRA money to pay the taxes on a conversion. However, as one approaches age 70 1/2 and mandatory withdrawls are approaching, then why not withdraw from the Traditional, use whatever money is required to pay the taxes on the withdrawl, and roll the rest into the Roth IRA? It would seem that there is a trade-off as to how many years in advance of mandatory withdrawls that one should begin a systematic rollover from Traditional to Roth.>>

In general, if you have no need for and will not use the money, then a transfer to a Roth may be beneficial. Otherwise, it probably won't. You must run the numbers, though, to be sure.

As to using minimum required withdrawals to fund a Roth, you cannot do that. You must take the withdrawal, and you must pay taxes on it. It cannot be transferred to the Roth at all. Worse, you must take care at that age how you do a conversion. The IRS will deem the first money out of the IRA as MRD money, so part or all of a conversion could be voided if you're not careful.

Let's take an example. Say you have $10K in an IRA from which you must take $2K this tax year. So let's say you decide to convert $2K to a Roth, and do so. Later in the year you take the remaining $8K from your traditional IRA and keep it. You would think the $2K you put in the Roth is legit because your total withdrawal for the year was $10K. The IRS, though, would say the first money taken that year was for the MRD of $2K. That's ineligible for conversion to a Roth, so the $2K placed in the Roth would be disallowed. Ain't that a kick in the pants?!!

Solution: Take and keep the MRD first, then do a conversion.

Regards..Pixy
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