This is a good point I had not considered before & is not talked about very often - There is an option to do Roth conversions in the same year, after taking RMDs (with RMD Tax witholding). The https://www.irs.gov/ website is not clear on this.....
I am a victim the yearly returns being much larger than I expected.
I retired in 2016 at age FRA age of 66, with $1M in deferred. Before RMD's started, I started taking 4% of the initial deferred balance between spending needs and conversions, initially expecting the conversions to only be done for 4 years. My RMD's finally started at age 72 in 2022. Last year, concerned over the growing balance, I restarted conversions on top of my RMD. So here I sit 8 years into retirement and my deferred balance has grown 25%, even with all the withdrawals. Who'd thunk too favorable a SORR would become problematic.....
"Can Converting to a Roth IRA Reduce Future RMDs?" (Ed Slott, Apr 19, 2024): https://www.morningstar.com/retirement/ ... uture-rmds
"the RMD cannot be converted. If you are in an RMD territory, you have to take the RMD. You must take it, and you pay tax on it, and it cannot be converted. Once you satisfy that year’s RMD, then any part or all of the remaining IRA balance can be converted, but it costs more because you had to pay the tax on the RMD, which couldn’t be converted."
The more of one's stock allocation is in a Roth IRA, the better.
Statistics: Posted by wwhan — Sat Aug 24, 2024 7:10 pm — Replies 48 — Views 3339