@Nowwhat wrote:
Thank you for your advise.
So, I understand that 2024 RMD passed, but are you saying I do not have to worry about taking an RMD for 2025? Would you suggest that I go ahead and transfer $8000 from my checking to my Roth account today? I know it wont fix everything, but will it help some with the penalty I am facing at tax time?
Thank you,
RMD is the minimum amount you must withdraw, put in your bank account, and have taxed, before you can do something else like a rollover. It is not a specific, special transaction, just a withdrawal amount. Since you withdrew your entire account, put it in your bank account and its being taxed, and you can't do any rollover (because it is past the 60 day window) you meet (and greatly exceed) the requirement. In other words, this complete withdrawal satisfies any RMD rule.
If you were eligible for rollover, the withdrawal would still satisfy the RMD rule, as long as you held that amount out of the rollover. In other words, if the balance was $100,000 and your RMD was $5000, you would have to hold out $5000 that you keep and pay tax on, and you could rollover up to the remaining $95,000. But, as already discussed, this is not a rollover situation. Your withdrew and must pay tax on the entire amount. The RMD rules simply are irrelevant.
Also, you can't contribute any money to your Roth IRA unless you have compensation from working, which means wages and self-employment profits. You said you are retired. Unless you have a part-time job or side gig that pays at least $8000 in 2025, you can't make any Roth IRA contribution. (More specifically, your contribution limit is $8000, or the amount of your wages, whichever is less. If you took a part-time job as a Walmart greeter and were paid $2000, you could contribute $2000 to the IRA. And so on.)
