RMD’s and Roth Conversions- Avoid IRS Penalties

by Prof. Robert Bloink and Prof. William H. Byrnes

Clients can—and especially for high-income clients, often should—continue to engage in retirement income planning strategies after reaching their required beginning date (RBD). Rollovers and conversions remain valuable even once the client reaches retirement age. However, once a client reaches their RBD, so is required to take annual required minimum distributions (RMDs) from retirement accounts, additional complications may arise in the course of executing even some of the most common retirement planning strategies. To avoid potential penalties, it’s particularly important to understand the interaction between the rules governing RMDs and Roth conversions—and how to correct a situation where a client’s RMD is mistakenly included in a Roth conversion.

Roth Conversions and RMDs: The Basics