Can a Roth Conversion Count as an RMD? The Simple Answer and Strategic Alternatives

Are you trying to figure out if you can kill two birds with one stone by using a Roth conversion to satisfy your Required Minimum Distribution (RMD)? I’ve got the straightforward answer for you, plus some smart alternatives you might want to consider.

The Quick Answer: No, a Roth Conversion Cannot Count as an RMD

To cut to the chase, a Roth conversion does not count as an RMD. These two financial deals are very different from each other and have different rules and goals.

The IRS is very clear about this, You must take your RMD before you can do a Roth conversion Your RMD amount is not eligible for conversion because the IRS considers it a taxable distribution that must come out of your retirement account first

Why Roth Conversions and RMDs Are Different

Here’s why these two processes serve different purposes:

RMDs (Required Minimum Distributions)

• Mandatory withdrawals from traditional retirement accounts once you reach age 73
• Based on your account balance as of December 31 of the previous year
• Must be taken by December 31 each year (with an exception for your first RMD)
• Taxed as ordinary income, like your paycheck
• Purpose: Ensure you withdraw part of your retirement savings and pay taxes on tax-deferred money

Roth Conversions

• Voluntary transfers of funds from traditional retirement accounts to a Roth IRA
• No age restrictions on when you can convert
• Converted amounts are taxed at your current ordinary income tax rate
• Purpose: Transform tax-deferred assets into tax-free assets for future withdrawals

The Sequencing Rule: RMD First, Then Roth Conversion

If you need to take RMDs and convert to a Roth in the same year, you must do these things in this order:

1. Take your full RMD for the year first
2. After the RMD is satisfied, then you can convert additional funds to a Roth IRA

Failing to take your RMD before a conversion can result in penalties The current penalty is 25% of the amount not distributed on time.

Strategic Alternatives When You Don’t Need Your RMD

If you don’t actually need your RMD to live on, here are some alternatives to consider:

1. Use RMD Money to Contribute to a Roth IRA (If Eligible)

While you can’t directly convert your RMD to a Roth IRA, you can:

• Take your RMD (and pay taxes on it)
• Then contribute to a Roth IRA separately if you:
  • Have earned income for the year
  • Are within the income limits for Roth contributions

For 2025, contribution limits are:

2. Qualified Charitable Distribution (QCD)

If you’re charitably inclined, this is a great option:

• Must be at least 70½ years old
• Can donate up to $108,000 in 2025 (adjusted annually for inflation)
• Donation goes directly from your IRA to a qualified charity
• Counts toward your RMD but isn’t included in your taxable income
• Win-win: Satisfy your RMD while supporting causes you care about

3. Roth Conversion of Non-RMD Funds

After taking your RMD, you can still do a Roth conversion with additional funds:

• Consider converting in years when your income is lower than normal
• This reduces the amount of future RMDs by lowering your traditional IRA balance
• You can even use part of your RMD money to pay the taxes on the conversion

Why Consider a Roth Conversion Strategy?

Even though a Roth conversion doesn’t count as an RMD, you should still think about it as you plan for retirement because Roth IRAs have three main benefits:

1. No RMDs – Roth IRAs aren’t subject to required minimum distributions during the original owner’s lifetime
2. Tax-free withdrawals – Qualified withdrawals are completely tax-free
3. Tax-free inheritance – Roth IRAs can pass to non-spousal beneficiaries tax-free in many cases

When to Consider a Roth Conversion

A Roth conversion might make sense if:

• You expect to be in a higher tax bracket in retirement
• You’re in a temporarily low tax bracket this year
• You want to reduce future RMDs
• You want to leave tax-free assets to your heirs

When to Avoid a Roth Conversion

A Roth conversion might not be ideal if:

• You need the money within 5 years (to avoid penalties)
• You’re currently in a high tax bracket
• The conversion would push you into a higher tax bracket
• You don’t have funds outside the IRA to pay the taxes

Additional Considerations for RMDs

It’s worth noting that RMDs don’t stop at any specific age – they continue for your entire lifetime. The current RMD age requirement is 73, and it will eventually increase to 75 thanks to the SECURE 2.0 Act.

RMDs can feel like they are limiting you, but they do give you a plan for how much you should take out each year, which can help you avoid spending all of your retirement savings too quickly.

Potential Drawbacks of RMDs

RMDs can have some downsides:

• They might push you into a higher tax bracket
• Once the money is withdrawn, it’s no longer growing tax-deferred
• They reduce flexibility in managing your finances
• They could trigger higher Medicare premiums through IRMAA (Income-Related Monthly Adjustment Amounts)

While a Roth conversion can’t count as an RMD, with proper planning, you can develop a strategy that works for your specific situation. Remember the correct sequence: take your RMD first, then consider a Roth conversion if it makes sense for your overall financial plan.

The most important thing is to understand the rules so you don’t get hit with penalties. And remember, what works for someone else might not work for you. Everybody’s financial situation is different, so it’s often a good idea to consult with a financial advisor or tax professional before making major decisions about your retirement accounts.

Have you been navigating RMDs and Roth conversions? What strategies have worked for you? I’d love to hear your experiences in the comments below!