Transfering stocks to Roth IRA?

[ripvanwinkle]

I don't have a 401K. I have a traditional IRA, stock portfolio and a Roth IRA. I'm coming up soon on having to take the IRA minimum distributions so I'm not putting any in on my taxes this year.

My question is this. If I transfer $10,000 of stocks into the Roth from the IRA and or taxable stock account, does that count against the maximum $7,000 yearly contribution? Yes I know I'll have to pay taxes on the transfer.

[teen persuasion]

I'm not clear on whether you are talking about an RMD (withdrawal from tIRA - could be put in taxable) or a Roth conversion (convert a chunk from tIRA to Roth IRA).

Neither one affects the contribution limit, though. Unless the additional taxable income pushes your AGI above the contribution cliffs, I suppose.

Do you have earned income (or does a spouse)? If none, then you can no longer contribute to a Roth or tIRA.

ETA: if you are required to take RMDs, you have to take that first before doing any Roth conversions.  You can't convert RMDs, either.  Just withdraw, or donate via QCD.

[minnesotapaintlady]

Feb 9, 2022 22:01:55 GMT -5 ripvanwinkle said:

I don't have a 401K. I have a traditional IRA, stock portfolio and a Roth IRA. I'm coming up soon on having to take the IRA minimum distributions so I'm not putting any in on my taxes this year.

My question is this. If I transfer $10,000 of stocks into the Roth from the IRA and or taxable stock account, does that count against the maximum $7,000 yearly contribution? Yes I know I'll have to pay taxes on the transfer.

If you transfer the money from your traditional IRA, no.  It's an IRA conversion, not a contribution.  If you get the money from your taxable account, it's a contribution. 

[ripvanwinkle]

I guess "conversion" is the word I should have used. Convert the traditional IRA stocks to my Roth and pay the taxes. I turn 71 in April. Is there a table I can use to see how much RMD I have to take this year? Should I convert before I have to take the RMD? Can I roll the RMD directly into the Roth IRA?

[teen persuasion]

RMDs start at 72 now. So convert some this year.

Once RMDs begin, you have to withdraw the RMDs first. Only after that's satisfied can you do more conversions.

How much to convert is up to you. How much tax do you wish to pay on it? Will the higher AGI make more of your SS taxable? Will it push you into IRMAA territory? Will it push you into a higher bracket? Don't forget to figure in state taxes, too.


No, you can't roll an RMD into a Roth.  But you can use the RMD funds to pay the tax on additional Roth conversions.


It looks like there are the new tables in this article: link

[susana1954]

Everyone's income situation is different, of course.  Mine is about $62,000, a little more than half from a pension and a little less half from SS.  It's pretty much equal, though.

Anyway, I withdrew $10k from my IRA.  A withdrawal and a conversion are equal in terms of taxes.  I had to pay 37% of that $10k in taxes.  Why?  More of my SS became taxable.  So if you are going to convert, do the max you are comfortable with . . .  maybe to the point of almost triggering IRMAA (increased Medicare premium).  

Of course, if you have already hit the max on taxing your SS and are already triggering IRMAA, then it doesn't matter.  If not, though, it isn't as simple as it sounds.  

[CCL]

This is why I'm doing conversions now rather than later.