Can inherited IRA from non-spouse RMDs be converted to a Roth IRA?
I am retired and not working. Next year I will need to start taking my RMD. I have an inherited IRA from a sibling. I don’t believe I can take the RMD from the inherited, pay the income tax and then put it in a Roth IRA so the future earnings are tax-free. Someone I know said I can do that.
I did find where if you were a spouse of the inherited IRA, you can do that but that does not apply in my case.
Would you confirm that it is not an option for me.
Thanks!
Terry Says
Whew — glad you are not taking advice from that “someone”!
First of all, contributions to an IRA of any type can only be made from EARNED INCOME — not from dividends, interest, or withdrawals — even though those are taxed as ordinary income.
Second, if your inherited IRA came to you after 2020, you have 10 years to withdraw the entire amount — either in pieces every year or in one lump sum. But that additional taxable income could raise your Medicare premiums if they increase your income enough.
There are separate rules for IRAs inherited from a spouse; they are complex and not applicable here.
It’s time to review your strategy with a competent tax advisor.
