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Subject: Re: Another IRA RMD Question Date: 7/21/2011 10:50 PM
Recommendations: 4
After I take my RMD and pay taxes on it the after tax balance of the RMD proceeds becomes "regular" money and can't be sheltered.


After this is done can I take some MORE money from within the IRA, pay the tax on that money and then move THAT money directly from the iRA to the Roth?

Basically correct. Let me re-state your sentence. You can take more money from withing the IRA and move that money to a Roth. Any amount that you do move is taxable income.

Technically, this is called a Roth conversion. Google that term, and you'll get a week's worth of reading.

Why would I consider doing this? Because I expect taxes to go up in the future.

Basically, yes. More specifically, you expect YOUR taxes THIS YEAR to be lower than your taxes in the future. You are choosing to pay the taxes now rather than waiting to pay them later.

For some, a conversion is a good idea. For others, not so good. And for some, it's hard to tell.

Personally, I did a Roth conversion in a year where I had unusually low income. I paid almost no tax at all on the conversion. (IIRC, some slipped me into the 10% bracket. Without the conversion I would have had negative taxable income.)

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