Can I convert an RMD from a traditional IRA to a Roth IRA after paying taxes if I am NOT working? I am getting conflicting answers

[macuser_22]

No.   A RMD cannot be put in ANY other tax deferred account.    (2020 was a special year because the CARES act eliminated all RMD's for 2020 only).

See IRS pub 590B.

https://www.irs.gov/publications/p590b

[fanfare]

Your work status has nothing to do with it.

If you still have funds in a Traditional IRA after you remove the RMD, you can convert all or part of that to a Roth IRA.

[Opus 17]

What makes it dis-allowed is that it is an RMD.

You can do a rollover of funds from a traditional IRA to a Roth IRA and pay the tax (also known as a Roth conversion) at any time for any reason, regardless of whether you are working or have taxable compensation. 

An RMD is a specific dollar amount that you are required to withdraw once you turn 70-1/2 or 72-1/2.  That amount can't be rolled over into another qualified plan, you have to put it in your regular checking account or whatever, and pay the taxes on it.

For example, if you have $100,000 in a traditional IRA and your RMD for 2021 is $5000, you could withdraw $5000 to satisfy the RMD, and then do a conversion of up to the remaining balance.

If you wanted to put the RMD funds into a Roth IRA, that would count as a contribution, not a rollover, and you would need taxable compensation from working.  

[fanfare]

The poster asked "Can I convert"?

A contribution, allowed by non-zero wages, is not a conversion.

[glforman]

Thanks for the great explanation.  And if I were to rollover my entire traditional IRA into a Roth, depending on the amount and my tax bracket, the tax consequences could be substantial.

[Opus 17]

@glforman 

“the tax consequences could be substantial”

Certainly.  But you can also do partial conversions.  You would have to look at your overall tax situations (deductions and credits as well as income).  Just as one relatively simple example, if you planned to buy an electric vehicle, that would be a good time to do a Roth conversion that would create a large tax bill that could be zeroed out by the electric vehicle credit.  

It does require careful analysis for each person’s specific situation.