Personal Investments • Inherited IRA tax strategy....

Bogleheads Brain Trust-

Elderly couple (late 80s/early 90s) is in the 22% tax bracket. They have significant (7 figure) assets in Traditional IRAs with no basis. They live largely on pension income/social security and really don't touch the IRAs.

Are they correctly taking their RMDs? At age 90, the RMD is about 1/8 of the balance.

Since RMD has to occur any way, are there a way to just Roth convert the RMD amount or does Roth conversion not count since they are both taxable in the same way.

An RMD cannot be converted because RMDs are never eligible for rollover. The RMD for all IRAs must be completed prior to any conversions. Once completed, conversions can be done, but both the RMD and the conversion will be included in taxable income.

Thanks for the clarification. Since RMD is going to be large in their 90's, wouldn't a good chunk of the IRA end up in a taxable brokerage account and pass to the heir with a step up basis? May be the problem is not as dire as the op thinks. This seems more of a first wall issue since the heirs already sems well off. Of course, they could have saved nothing and this would be helpful to them.

Statistics: Posted by gavinsiu — Tue Sep 24, 2024 8:51 pm — Replies 11 — Views 411

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