Managing Your Money

Take your Required Minimum Distributions (RMD) before converting

I have a Traditional IRA that I want to convert to Roth IRA. I am required to take an RMD from my Traditional IRA before the end of 2011. Can I avoid taking my RMD for this year if I convert before the end of the year?

No. If you are suppose to take a Required Minimum Distribution (RMD) from your Traditional IRA this year, you will need to take that distribution before you convert your Traditional IRA to a Roth IRA. Required Minimum Distributions are required by the IRS to prevent funds in your traditional IRA from being in a tax-sheltered vehicle indefinitely. In addition, RMDs are not allowed to be deposited or rolled over into another IRA. Therefore, once and RMD is made, it must remain outside of a tax sheltered vehicle like an IRA or Roth IRA.

If you mistakenly, convert your traditional IRA to a Roth IRA before you take your RMD, the amount of our RMD will be considered an excess contribution to your Roth IRA. Excess contributions are subject to a 6 percent penalty if not corrected in a timely manner. For more information on how to correct an excess contribution to your Roth IRA, visit the IRS’ web site at

Continue Reading Below