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Hi CNC -

You have to take your RMD as a withdrawal (or as a qualified charitable distribution), not as a Roth conversion. That said, if you take the RMD as a withdrawal, once that money is in your hands, you don’t have to spend it. If you’d like, you can either invest it in an after tax account or use that money to pay the taxes due on the money you are converting from your Traditional IRA to your Roth IRA.

The mechanics of a Roth conversion are pretty straightforward. Your broker probably has a form, possibly even a do-it-yourself online process, that lets you kick it off. Once it’s complete, you’ll get tax forms in the mail showcasing the amount you withdrew from the Traditional and how much of it was deposited into the Roth account.

Do note that the money converted to a Roth is typically taxed as ordinary income. If you have a non-zero tax basis in your Traditional IRA (such as from making non-deductible contributions), there is a process to allocate your withdrawal across both the taxable growth and the non-taxed basis, which may help your tax bill somewhat.

Regards,
-Chuck
Discovery/HR Home Fool
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