Roth vs. Trad IRA Benefits - even from converting LATE?! (like 70 y/o late)

[antelopedundee]

I'm not a financial advisor, but your Dad can probably move some of the RMD into a Roth each year. If he didn't last year, he could put the limit into a Roth for last year until April 15. Otherwise, he can put in for this year both for he and his wife assuming he's married.

You can't put RMD income into a Roth until you have satisfied your RMD and that's only if you have earned income which would allow the contribution. I doubt that the contribution limits at age 73+ would do much for him. Take the money out, pay the piper and spend it on fun since he's on the downhill side of life.

 

[Mallardsx2]

You have 10 years to withdraw the Roth funds that were passed to you at death by a non-spouse. These withdrawals leave the Roth and can’t be rolled to your personal Roth or Trad IRA. These withdrawals have left the IRA ecosystem. You can use the funds taken from that Roth as a distribution to pay for tax due if you wanted to convert your Trad IRA to a Roth or could spend any other way you desire.

Good point.

Also, people should keep in mind that it would be a shame to pull out that $ before year 10 and lose all of that tax free growth. Unless you really needed it.

 

[antelopedundee]

Except he was happier than a pig in a new mudhole when the Government let him use their money for FREE for all of those years, but now he's grousing because they are calling in their chips.

Also when you borrow money from a financial institution you agree to pay it back. Same thing with a tax deferred IRA or 401k. When you start to withdraw it will be taxed. A RMD essentially forces a withdrawal and tax payment, but you knew that or should have known that going in. Now that the COVID crisis has passed they could set it back to age 70 1/2.

FWIW I don't much like paying taxes either, but it is what it is. If you have to pay taxes it means that you've made money.