Personal Finance (Not Investing) • RMD, then Roth Conversion - Does order matter?

[Moved into a new thread from: SECURE Act requires taking RMDs before doing any Roth conversions? --admin LadyGeek]

Can I piggy back this question, which is related to the order of RMD and then Roth Conversion? For some reason I thought that when you took your RMD and then did a Roth Conversion, that all those distributions are lumped into one number on your 1099-R, and there is no date of transaction listed. So, for example, If I did a 12k RMD and a 88k Roth Conversion, at the end of the year I get one 1099 that says 100k. Is there some other form that either I or Vanguard generates that shows the RMD amount and the order they were taken?

I haven't done both an RMD and a conversion to Roth in the same year but...

I suspect that if you use tax software (e.g. Turbo Tax) the interview questions will allow you to specify that 12k was RMD and 88k was converted to Roth IRA. In other words, this should be sorted out on your income tax forms.

I don't think Vanguard needs to be involved other than the single 1099-R document.

Regards,

I am one of the only dinosaurs left that is still doing paper filing. DW is just turning 70 so still have a few years till the age 73 RMD, but saw that other thread where someone suggested they just ignore their error in the order of Conversion and RMD, and, as you know from my oft concerned about future issues, thought I would ask. I would never do anything purposefully that was not totally correct. And trying to weigh out which option is best: A) take the RMD in January with most withheld for taxes and then do the conversion with the full amount going into the roth in January, followed by a December conversion to get the income up close to the IRMAA limit or B) wait until December to do the RMD with taxes withheld for safe harbor and followed by the one conversion to get income up to desired bracket filled but avoiding IRMAA. I like getting the Roth in early in the year for maximum untaxed benefit, but then the amount of the RMD is out of the market the entire year, versus keeping the entire amount in the market within the tIRA until December, but losing the early Roth benefits. As usual, I am over thinking it. LOL

Statistics: Posted by capran — Thu Dec 12, 2024 11:29 am — Replies 13 — Views 466

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