A Safer Retirement and Environment – What We’re Implementing to Help Keep You Safe: READ MORE

Here at Cox Strategic Wealth, we are adhering to state and local guidelines in order to protect both the health and safety of clients and staff. Keeping our clients and staff safe is our highest priority and we’re taking all appropriate measures to ensure a safe environment. Should you prefer to not meet face-to-face, we are continuing to serve our clients through virtual settings such as Zoom or phone calls.

We look forward to continuing to help individuals and families achieve their ideal retirements.

Cox Strategic Wealth
(949) 888-6644

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CALCULATING YOUR RMD & ROTH CONVERSIONS: TODAY’S SLOTT REPORT MAILBAG

By Andy Ives, CFP®, AIF®
IRA Analyst

Question:

When calculating my required minimum distribution (RMD) amount, is my Roth IRA balance added to my traditional IRA balance? I understand I don’t have to withdraw from my Roth – just want to know how RMD’s are calculated.

Thanks

Answer:

When calculating your RMD, only the traditional IRA balance on 12/31 of the previous year is included. Your Roth IRA is a separate entity and has no bearing on your traditional IRA RMD. If you have multiple traditional IRAs, each IRA must calculate its own RMD, but the total RMD amount can be aggregated and taken from one (or more) of your traditional IRAs.

Question:

I recently transferred a Federal TSP (Thrift Savings Plan) retirement account to a traditional IRA. Is it possible in the same year to convert it to a Roth IRA?

Answer:

Yes, in the same year, you can convert all or a portion of the IRA dollars that were rolled over from the Thrift Savings Plan. Neither the direct rollover from the TSP to the IRA nor the Roth conversion will count against the one-rollover-per-year rule, so no worries there. Be aware that these transactions will generate a string of tax forms, but when netted together and reported properly, the IRS will see what happened. For example, the TSP will issue a 1099-R showing the plan money leaving. The IRA custodian will issue a 5498 showing the TSP money being rolled over. For the Roth conversion, the IRA custodian will issue its own 1099-R and also report the transaction on the 5498.

https://www.irahelp.com/slottreport/calculating-your-rmd-roth-conversions-todays-slott-report-mailbag

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