Can I reinvest my RMD into a Roth IRA?

If you don’t need your required minimum distributions (RMD) from your traditional IRA for living expenses, can it be reinvested in a Roth IRA? Yes, you can—assuming you are eligible for a Roth based on your income. This is because the money to fund your IRA can come from any pool of cash that you have available.

What should I do with my RMD money?

Reinvest Your RMD While you can’t reinvest the RMD in a tax-advantaged retirement account, you can stash it in a deposit account or reinvest it in a taxable brokerage account. If your liquid cash cushion is sufficient, consider tax-efficient investing options, such as municipal bonds.

Can I reinvest my required minimum distribution?

Reinvest the Money You may wonder, Can I reinvest my required minimum distribution? The answer is yes, with caveats. You can invest an RMD in a taxable investment account—but not back into most retirement accounts.

Do I need to take RMD from inherited Roth IRA?

Roth IRA owners don’t need to take RMDs during their lifetimes, but beneficiaries who inherit Roth IRAs must take RMDs.

What can you do with a RMD you don’t need?

I’m 72 and Don’t Need My RMDs…What Should I Do?

1. Provide for your long-term care today, give to family or charity tomorrow.
2. Convert pre-tax funds to a Roth and use the RMD funds to pay taxes.
3. Fund Roth IRAs or 529s for future generations.
4. Fund a Wealth Replacement Trust for family.

What is my RMD on an inherited IRA?

What is a Required Minimum Distribution (RMD) for a Beneficiary/Inherited IRA or QRP? An RMD is the amount of money and/or assets that must be taken out by the beneficiary each year by December 31.

Does RMD affect Social Security?

If your RMD is high enough, it could push you over the limit where your Social Security benefits become taxable at the federal level. Whether Social Security gets taxed depends on your provisional income, which is 50\% of your annual benefit plus your non-Social Security income.

What happens when you inherit a Roth IRA?

When you inherit a Roth IRA, the money you receive gets the same tax-advantaged treatment as the original account. Because the money was contributed on an after-tax basis, you can withdraw the contributions at any time without paying tax or penalty.

When must you take RMD from inherited IRA?

The rules for how IRA beneficiaries must take RMDs will depend on when the account owner passed away. IRA owners generally must take their first RMD by April 1 of the year after they reach age 72 (age 70½ if you attained age 70½ before 2020); that date is called their required beginning date (RBD).