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

Here at Chadmere Capital Inurance and Financial Services, 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.

Chademere Capital Insurance and Financial Services
(803) 242-1050

CLOSE

Book or Change Your Appointment

ROTH CONVERSIONS OF ILLIQUID ASSETS AND ROTH CONVERSIONS TO SATISFY RMDS: TODAY’S SLOTT REPORT MAILBAG

By Ian Berger, JD
IRA Analyst

Question:

I have self-directed traditional and Roth accounts at an SDIRA Custodian.  Can I do a Roth  conversion of an illiquid asset from the traditional to the Roth account?  The investment I want to convert is a debt-only asset (no equity component) generating a fixed 8% dividend. It has a consistent FMV from year to year. I know I will pay tax on the conversion. I am 75 and retired.

Thank you,

Ray

Answer:

Hi Ray,

There is no rule preventing someone of your age from doing a Roth conversion or preventing you from converting illiquid assets. Since Roth conversions are taxable, the only practical issue would be valuing an illiquid asset for figuring out the taxes. However, since you indicate that the FMV of your investment can be determined, that should not be a problem for you. Keep in mind that the amount you convert cannot be used to satisfy the RMD that is due in the same year. (See Q&A below.)

Question:

Next year in 2022, I will be age 72 in March. I plan to request my first RMD in December of this same year 2022.

If I do a Roth conversion in early February of next year (2022), before I become age 72, will this count toward my RMD for the year 2022?

Answer:

Generally, any IRA funds you take in 2022 – even before you turn 72 – will count towards your 2022 RMD. However, that’s not the case for funds that you roll over. A Roth conversion is considered a rollover, so it cannot satisfy your 2022 RMD. You could, however, take additional amounts beyond your RMD and convert those amounts after first taking your RMD.

https://www.irahelp.com/slottreport/roth-conversions-illiquid-assets-and-roth-conversions-satisfy-rmds-today%E2%80%99s-slott-report

Ready To Take

THE NEXT STEP?

 

For more information about any of our products and services, schedule a meeting today.

Schedule a Meeting
Or give us a call at (803) 242-1050

Investment advisory services offered through Foundations Investment Advisors, LLC (“Foundations”), an SEC registered investment adviser. Nothing on this website constitutes investment, legal or tax advice, nor that any performance data or any recommendation that any particular security, portfolio of securities, transaction, investment or planning strategy is suitable for any specific person. Personal investment advice can only be rendered after the engagement of Foundations, execution of required documentation, and receipt of required disclosures. Investments in securities involve the risk of loss. Any past performance is no guarantee of future results. Advisory services are only offered to clients or prospective clients where Foundations and its advisors are properly licensed or exempted. For more information, please go to https://adviserinfo.sec.gov and search by our firm name or by our CRD #175083.

 ADV Part 2A & Form CRS              Privacy Policy