IRA Required Minimum Distributions

[Guest SteveHample]

Will a conversion to a Roth satisfy an RMD for the year of conversion? I'm sure this has been answered before and the answer is probably no. However, the logic is not clear to me. If the IRA owner is pulling funds out of an IRA and paying taxes while converting, that would seem to accomplish the IRS / Congressional goal of forcing the payment of taxes. It seems an administrative hassle to first take a small part of the IRA as a regular distribution before converting the whole thing. Am I wrong in my thinking?

[Appleby]

Steve,

According the to Roth IRA regulations, proposed and final, an IRA owner who is age 70 ½ or older must take the RMD from the IRA before converting the traditional IRA to a Roth IRA.

“… if an IRA owner has reached age 70 1/2, any amount distributed (or treated as distributed because of a conversion) from the IRA for a year consists of the required minimum distribution to the extent that an amount equal to the required minimum distribution for that year has not yet been distributed (or treated as distributed); as a required minimum distribution, that amount cannot be converted to a Roth IRA…”

It is important to note as well that for taxable years beginning before January 1, 2005, any required minimum distribution from an IRA is included in income for purposes of determining modified $100,000 AGI limit (for eligibility to convert to a Roth IRA).