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Author: buznitz One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76418  
Subject: Minimum Distr to a ROTH Date: 11/1/1999 10:05 PM
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If one is in the minimum distribution phase of life, can one satisfy the yearly minimum distribution by converting that amount to a Roth?
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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 15033 of 76418
Subject: Re: Minimum Distr to a ROTH Date: 11/2/1999 8:22 AM
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Buznitz writes:

<<If one is in the minimum distribution phase of life, can one satisfy the yearly minimum distribution by converting that amount to a Roth?>>

I assume you're speaking of minimum required distributions (MRD) that must begin no later than April 1 of the year following the year of reaching age 70 1/2. MRD cannot be converted to a Roth. You may cash in the entire traditional IRA, keep the MRD for that year, and transfer the remainder to a Roth. You just can't transfer the MRD. Also, you must be careful in doing a conversion at that age. The IRS deems the first money out of a traditional IRA is the MRD, so if the money gets to the Roth too early, the conversion may be disallowed.

For example, say you have $10K in a traditional IRA from which you must take $2K as an MRD. You decide to convert $2K to a Roth. Later you take and keep the remaining $8K (or four times more than the MRD calls for). You think you're safe, but the IRS will disallow the conversion because the first money out of the traditional IRA was the $2K converted to the Roth. The IRS will deem that to be that year's MRD, the MRD cannot be converted to a Roth, so the conversion will be disallowed. Ain't conversion rules fun??

Regards..Pixy


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