Question:

I am 72 years old and must take an RMD (required minimum distribution) from my traditional IRA.  Can I convert this to a Roth?

Click here to read Merriman's answer!

RICHARD BUCK:

In a word, no.

RMDs and Roth IRA conversions are quite separate entities.  Converting to a Roth will not relieve you of the necessity to take your RMD.  Here's a little more detail:

You MUST take an RMD, which means you'll withdraw money from your traditional IRA, and you'll have to pay taxes on whatever amount you withdraw. This will leave you with money for whatever you like. You can reinvest it in a taxable account, add it to your emergency savings, spend it, give it away or anything else without further tax-related strings attached.

You MAY convert some or all of your traditional IRA (after you take the RMD) to a Roth IRA. Whatever balance you convert will be taxed. Once it?s in a Roth IRA, it will remain immune from further taxes and will not be subject to RMDs.

Whether or not you should do the conversion is another story. Phuc Dang, a Merriman advisor who is a CPA, has written an article at FundAdvice.com that walks you through the decision about whether or not to make the conversion. The bottom line is this: Only in rare cases is it obvious that a Roth conversion is the best choice. Because future tax rates are unknown, most investors cannot count on getting a benefit from converting a traditional IRA to a Roth.

Richard Buck is publications manager of Merriman.