Transcript:
Easan Arulanantham:
Will Required Minimum Distributions be counted as income when determining if the Roth income limits have been reached. So can I still contribute to my Roth even with some earned income, even though I have an RMD.
Tom Vaughan:
So a Roth IRA is an IRA that grows tax free, you can put money into it if you’re making money, right? $6,000. And if you’re over age, what $57,000, you do not get the write off. So if I put in 6000, or 7000, in an IRA, I can write that off on my taxes, I do not get the write off. But in exchange for that, I get tax free growth after that correct. And so, but they have limits to how much you can make. If you make more than that, then you can’t put any money in the Roth IRA. And so, if you’re over 72, you’re having to pull money out of your retirement accounts.
Let’s say you’re still making money and you’d like to add to a Roth you gonna run into some problems there, because potentially, that requirement of distribution does count towards your overall modified adjusted gross income that would drive that number above the what’s allowed and potentially make it so you can’t add to that kind of depends. Not a super common scenario, because a lot of people have retired prior to 72. But it can happen. The only other one I could see is if you’re doing requirement distributions for a beneficiary IRA. Yeah, that’s right. And like, but usually, that would end in 10 years. So yeah. And so sometimes you’ll have run into issues with that, but it’s more of a temporary issue. Unless you have an older Benny, you could be 60 still working. Now you got this money coming from this beneficiary IRA and the combination of your work and that bombshell from being able to add to Roth IRA.
Obviously, once once you get into the right tax bracket, you can convert money from your if you have it, from your IRAs to your Roth, and there’s no income limits on that. You just have to do it at a time when you’re in a relatively low tax bracket, in my opinion below the 24% tax bracket. And so oftentimes, that means that somebody is no longer working, but not always depends on what you’re making. So there’s some possibility of conversion but yes, to answer the question, requirement distribution is counted as part of your number that you have to get under in order to make that contribution to a Roth IRA.