Can 2020 rmd's taken less than 60 days be converted?

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bdoran
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Can 2020 rmd's taken less than 60 days be converted?

Post by bdoran » Thu Mar 26, 2020 9:52 am

Not knowing of pending tax changes I took 28k Rmd for 2020 at Vanguard from tira and placed money in Vanguard taxable account. Is there a window to put money back in an IRA or Roth conversion?

Silk McCue
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Re: Can 2020 rmd's taken less than 60 days be converted?

Post by Silk McCue » Thu Mar 26, 2020 10:41 am

If it has been less than 60 days you should be able to put it back by treating it as an IRA rollover. You will just need to be clear that that is what you are doing with your broker.

Since the law hasn't been signed this thread will likely get locked. Once it passes you can explore whether or not a Roth conversion is allowed.

Cheers

Gill
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Re: Can 2020 rmd's taken less than 60 days be converted?

Post by Gill » Thu Mar 26, 2020 10:46 am

If you are less than 60 days I'd return it to the IRA. I'm over 70 days and wish I had that option but I'm hoping the legislation will allow its return.
Gill
Cost basis is redundant. One has a basis in an investment | One advises and gives advice | One should follow the principle of investing one's principal

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prudent
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Re: Can 2020 rmd's taken less than 60 days be converted?

Post by prudent » Thu Mar 26, 2020 10:58 am

Thread is actionable based on whatever is permitted under current law.

Gill
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Re: Can 2020 rmd's taken less than 60 days be converted?

Post by Gill » Thu Mar 26, 2020 11:01 am

As Prudent has indicated, we are free to discuss this. Current law permits a return to the IRA within 60 days. If you are within 60 days I'd do it and then see what develops. I wish I had that option or I'd do it today.
Gill
Cost basis is redundant. One has a basis in an investment | One advises and gives advice | One should follow the principle of investing one's principal

rkhusky
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Re: Can 2020 rmd's taken less than 60 days be converted?

Post by rkhusky » Thu Mar 26, 2020 11:34 am

Under current law, is it better to have taken an RMD in January or now? You can’t TLH in an IRA.

jebmke
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Re: Can 2020 rmd's taken less than 60 days be converted?

Post by jebmke » Thu Mar 26, 2020 11:39 am

rkhusky wrote:
Thu Mar 26, 2020 11:34 am
Under current law, is it better to have taken an RMD in January or now? You can’t TLH in an IRA.
If one does not need the cash, I think doing the RMD in December is optimal. That is when you have the most information about your tax situation and can make decisions about withholding accordingly.

Nothing prevents one from selling equity and keeping the funds inside the RMD if the question relates to equity market valuations.
When you discover that you are riding a dead horse, the best strategy is to dismount.

kaneohe
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Re: Can 2020 rmd's taken less than 60 days be converted?

Post by kaneohe » Thu Mar 26, 2020 12:43 pm

might want to wait for Alan S. reply:

"The first distribution from your IRA for any year an RMD is due is considered to be part of your RMD for that year and is therefore not rollover eligible" https://www.investopedia.com/articles/r ... 110503.asp

MathIsMyWayr
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Re: Can 2020 rmd's taken less than 60 days be converted?

Post by MathIsMyWayr » Thu Mar 26, 2020 1:38 pm

Isn't any money taken out of tIRA counted as RMD first? In other words, you have to meet the RMD requirement before you can do Roth conversion.

Alan S.
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Re: Can 2020 rmd's taken less than 60 days be converted?

Post by Alan S. » Thu Mar 26, 2020 1:42 pm

bdoran wrote:
Thu Mar 26, 2020 9:52 am
Not knowing of pending tax changes I took 28k Rmd for 2020 at Vanguard from tira and placed money in Vanguard taxable account. Is there a window to put money back in an IRA or Roth conversion?
Assuming that 28k was the RMD for the specific account (did not include RMDs from other IRAs you own), you cannot roll any of it over or convert it.
That's current law, but likely to change in a couple days. Details cannot be discussed here until the law is formally changed.

kaneohe
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Re: Can 2020 rmd's taken less than 60 days be converted?

Post by kaneohe » Thu Mar 26, 2020 1:58 pm

perhaps do the rollover to secure the 60 day safety (if you haven't done a similar thing within 12 mos. Then be prepared to pay the 6% excess tax penalty unless you can remove in a timely manner. Then be prepared to go in the best of 2 directions.

Topic Author
bdoran
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Re: Can 2020 rmd's taken less than 60 days be converted?

Post by bdoran » Thu Mar 26, 2020 2:43 pm

In response to Mathismyway and Kaneoshe - My understanding is if bill is passed the 2020 RMD's will be suspended. I would hope money that was removed from TIRA would be considered a normal distribution and not RMD. 1099R's do not distinguish RMD's from other distributions I understand under previous law first distributions were RMD's and not eligible for rollover. I really appreciate your input and hope there is clear rules in time for 60 day window.

Shallowpockets
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Re: Can 2020 rmd's taken less than 60 days be converted?

Post by Shallowpockets » Thu Mar 26, 2020 4:14 pm

An RMD that is actually an RMD to satisfy the RMD for that year cannot be rolled into a tax deferred account. If you take excess money out of an account that is subject to RMDs you can put that extra into a ROTH as a rollover, subject to ordinary gains for taxable purposes.

zeugmite
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Re: Can 2020 rmd's taken less than 60 days be converted?

Post by zeugmite » Thu Mar 26, 2020 8:50 pm

If RMD is suspended for 2020, then no distribution is an RMD, because the "minimum" distribution would be $0.

Naikansha
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Re: Can 2020 rmd's taken less than 60 days be converted?

Post by Naikansha » Thu Mar 26, 2020 10:11 pm

Can such a rollover be done if a qualified charitable distribution has also been taken and sent to the charities?

Silk McCue
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Re: Can 2020 rmd's taken less than 60 days be converted?

Post by Silk McCue » Fri Mar 27, 2020 4:53 am

Naikansha wrote:
Thu Mar 26, 2020 10:11 pm
Can such a rollover be done if a qualified charitable distribution has also been taken and sent to the charities?
Any rollover that was determined to be allowable could not include any QCDs.

Cheers

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