A Roth conversion does not count as an RMD, and the IRS treats them as separate transactions

When you convert money from a traditional IRA to a Roth IRA, that conversion is not considered a required minimum distribution (RMD). The IRS sees them as two different things: an RMD is money you must withdraw from a traditional IRA after age 73 (as of 2023), while a conversion is a voluntary transfer you choose to make. You can do both in the same year, but one does not satisfy the other.

This matters because if you convert money but still owe an RMD, you must take the RMD separately. If you do not, you face a penalty of 25 percent on the amount you should have withdrawn (reduced to 10 percent if you correct it within two years). The conversion itself does not reduce what you owe.

Key Takeaways

  • An RMD and a Roth conversion are separate actions — completing one does not satisfy the other requirement.
  • You must withdraw your full RMD amount from your traditional IRA before December 31, even if you also convert money that same year.
  • The IRS calculates your RMD based on your account balance on December 31 of the prior year, before any conversions you make in the current year.
  • If you convert money and miss your RMD, the penalty is 25 percent of the shortfall, though it can be reduced to 10 percent if you correct it quickly.
  • Some people convert their RMD amount itself, which counts as taking the distribution, but this requires specific steps to work correctly.

How the IRS calculates your RMD before conversions happen

Your RMD is calculated using your account balance on December 31 of the year before you turn 73 (or the year before you reach the age that triggers RMDs for your situation). This snapshot is locked in before the current year begins, so any conversions you make during the year do not change the amount you owe.

For example, if your traditional IRA balance was $500,000 on December 31, 2023, and you turn 73 in 2024, your 2024 RMD is calculated from that $500,000 figure. If you convert $100,000 to a Roth in March 2024, your RMD does not shrink — you still owe the full amount based on the $500,000 starting balance.

The difference between taking an RMD and converting money

An RMD withdrawal is money you take out of your traditional IRA because the law requires it. You can do whatever you want with it — spend it, reinvest it, or move it to another account. The money leaves your traditional IRA and goes to you (or your bank account).

A Roth conversion is a transfer from your traditional IRA directly to a Roth IRA. The money does not come to you; it moves from one account type to another. You pay income tax on the amount converted, but the money stays in a retirement account and grows tax-free from that point forward.

Because conversions do not involve you receiving the money, the IRS does not count them as distributions that satisfy your RMD. You can convert $50,000 and still owe a separate $30,000 RMD withdrawal.

What happens if you convert your RMD amount itself

Some people try to satisfy their RMD by converting the required amount to a Roth. This can work, but only if you follow the correct procedure. The conversion must be treated as a distribution first — meaning the money is deemed to come out of your traditional IRA to satisfy the RMD, and then it is immediately converted to the Roth.

In practice, this is tricky. Many financial institutions do not handle this automatically, and if the conversion is not structured correctly, the IRS may treat it as a conversion that does not count toward your RMD, leaving you short. If you want to do this, contact your IRA custodian (the bank or brokerage holding your account) and ask them explicitly whether they can process an RMD-sourced conversion. Get their answer in writing.

Even if your custodian agrees, you still owe income tax on the full amount converted, just as you would on any conversion. The only difference is that the withdrawal portion satisfies your RMD requirement.

Penalties for missing your RMD when you have also converted

If you convert money but fail to take your full RMD by December 31, you owe a penalty on the shortfall. As of 2024, the penalty is 25 percent of the amount you should have withdrawn but did not. This is a significant cost and applies even if you converted a large amount — the conversion does not erase the RMD requirement.

The penalty can be reduced to 10 percent if you correct the mistake within two years. To correct it, you must withdraw the missing RMD amount and file Form 5329 with the IRS explaining the error. You will still owe tax on the late withdrawal, but the penalty drops.

How to handle both an RMD and a conversion in the same year

The safest approach is to treat them as two separate transactions. First, take your full RMD withdrawal by December 31. Once that is done, convert whatever additional amount you want to a Roth. This way, there is no confusion about whether the conversion counts toward your RMD — it does not, and you have already satisfied the requirement.

If you use a brokerage or bank that allows you to manage multiple accounts, you can take the RMD from one IRA and convert from another. The IRS allows this as long as your total RMD across all your IRAs is met. Just keep records showing which withdrawal was the RMD and which was the conversion.

Tell your custodian in writing what you are doing. When you request the RMD, specify that it is your required minimum distribution. When you request the conversion, specify that it is a Roth conversion. This creates a clear paper trail if the IRS ever asks questions.

Frequently Asked Questions

If I convert my entire RMD amount, do I still have to take a separate withdrawal?

No, if the conversion is properly structured as an RMD-sourced conversion, the amount converted counts as your distribution. However, your custodian must process it correctly, and you must get confirmation in writing that they will treat it as an RMD. Many custodians do not offer this, so ask first.

Can I convert money, then take my RMD later in the year?

Yes. The order does not matter to the IRS. You can convert in January and take your RMD in December, or vice versa. What matters is that both happen by December 31 and that you take the full RMD amount.

What if I convert more than my RMD amount — does the excess count?

No. If your RMD is $30,000 and you convert $50,000, the entire $50,000 is treated as a conversion. None of it counts toward your RMD. You still must withdraw the full $30,000 separately.

Do I pay taxes on both the RMD and the conversion?

Yes. You pay income tax on the RMD withdrawal (unless part of it came from after-tax contributions). You also pay income tax on the conversion amount. Both are taxable events in the year they occur.

What if my custodian will not let me do an RMD-sourced conversion?

Take your RMD as a regular withdrawal, then convert a separate amount if you want. This is the most straightforward path and avoids any risk of the IRS disallowing the conversion as an RMD substitute.