Required Minimum Distributions

[Leaf219]

I did not distribute enough RMD. I have also rolled over all of my IRA accounts into a Roth IRA. This is my first year to distribute RMD, so I have a few extra months. Would this solution work: I would take $1,000 from my bank account and put it into one of my old IRA accounts and make it a 2021 contribution. I would deduct $1,000 from my income for 2021 on my 1040. Then I would distribute $1,000 from my IRA account and apply that to my 2021 RMD. I will use my RMD distribution for ordinary expenses. So far, I have not made any contributions to my 2021 IRA accounts.

[fanfare]

@Leaf219 

you have almost the right idea but it is not that complicated.

If you converted your IRA you can no longer satisfy the RMD from those funds.

instead, apply some or all of your eligible 2022 contributions to make up the shortfall.

that reduces the amount you would actually be allowed to contribute in 2022.

See Form 5329 for the details.

[fanfare]

If you're retired with no earned income the solution  I proposed won't work.

You would have no eligible contribution to allocate.

I presume you are still working, or at least, were working in 2021.

[Leaf219]

The reason I am making a contribution to my Roth Account for 2021 is because I have no contributions for 2021.

[fanfare]

you first need to allocate 2021 allowed contributions to make up the shortfall in your Traditional IRA RMD, as you originally suggested.

OR

apply 2022 allowed contributions, if you have any.

[Leaf219]

My wife works as a contractor (1099). So, we have earned income for the contribution.

Thanks so much.

[fanfare]

@Leaf219 

I'm all screwed up on this topic.

Form 5329 Part IX is for excess accumulation in an IRA (RMD shortfall).

There's no provision there to make up a shortfall by applying available next-year contribution amounts without actually making a contribution.

I apologize for that incorrect answer.

[dmertz]

@Leaf219 , what you proposed in your original question doesn't quite work.  Because the Roth conversion is considered to be a distribution from the traditional IRA and a taxable rollover to the Roth IRA, the distribution included the remainder of your RMD, the amount of which was not eligible for rollover to the Roth IRA.  Rolling that portion over to the Roth IRA makes it an excess contribution to the Roth IRA to the extent that it exceeds the amount that you are eligible to contribute to a Roth IRA for 2021.

Because your RMD was distributed from the traditional IRAs when you moved the money to a Roth IRA, your RMD was fully satisfied and you have no need for Form 5329 Part IX.

Assuming that the amount of the RMD that remained to be satisfied at the time that you converted everything to Roth was $1,000, the correction is to tell TurboTax that you converted $1,000 less than the amount that was moved to the Roth IRA and that you made a $1,000 regular contribution to the Roth IRA.  You'll also need to inform the Roth IRA custodian of this so that the Form 5498 that they issue shows a $1,000 regular contribution in box 1 and $1,000 less in box 3 as a Roth conversion contribution than they would otherwise show.  If you are eligible to contribute to a Roth IRA for 2021, you don't have to do anything else.  Otherwise, if your modified AGI for the purpose makes you ineligible to make a $1,000 Roth IRA contribution, you would need to recharacterize the excess regular Roth IRA contribution to be a traditional IRA contribution or obtain a return of excess contribution from the Roth IRA.

[Leaf219]

Thanks for your long explanation. I'm sure that took some time and thought.

If I am reading your response correctly, you are assuming that I rolled over all of the money from my Traditional IRA into my Roth IRA. That is what I did. But I did that after I made a distribution for my RMD, so I had less money in my Roth IRA than I originally had in my Traditional IRA.

I'm pretty sure I have figured out what I need to.

Thanks again.

[Leaf219]

Thanks for your help