During these final weeks of 2026, we are dedicating these pages largely to year-end planning, which involves a mixture of retirement savings, mandatory withdrawals, potential tax savings, charitable giving, and estate planning. These considerations are complex and intertwined, requiring time and (usually) professional assistance to avoid costly errors.

In this Blog, we recently covered the topic of Required Minimum Distributions (RMDs) from Qualified Retirement Accounts. Understanding that taxpayers will eventually be faced with these taxable transactions, our goal is to suggest ways and means of improving long-term investment results.

As an important component of this planning process, Roth IRA Conversions (from pre-tax Retirement Accounts) need to be discussed. We are frequently asked if an RMD can be converted to a Roth IRA. That answer is an emphatic “NO!” In order for a taxpayer to convert any IRA asset to a Roth IRA, any RMDs for the year of the conversion must have already been taken.

Roth Conversions are a legal process used by taxpayers who are looking to reduce their future RMD amounts. In the Roth Conversion process, assets from a taxable IRA are transferred directly to a Roth IRA, creating a taxable distribution of the total value of cash and/or assets converted. There is no limit to the dollar value of the Roth Conversion, but tax rules apply. Any funds not converted (e.g., for paying tax on the conversion) may be subject to a 10% penalty if the account holder is under age 59-1/2.

When an RMD is mandated from a Traditional IRA, that entire RMD must leave the account prior to any desired Roth Conversion taking place. What can be done, assuming the taxpayer is eligible to make a Roth IRA contribution, is to use net proceeds of the RMD to make a maximum allowable contribution to the Roth. Taxes would already have been assessed on the funds contributed.

Important here is the distinction between Roth Conversions and Roth contributions. Roth IRA contributions are limited by the account owner’s income, as measured by Modified Adjusted Gross Income, or MAGI. For single filers, Roth contributions are available to taxpayers with a MAGI under $153,000 (2026 limits are $7,500, plus an additional “catch-up” contribution of $1,100). For married filing jointly, contributions are limited to taxpayers with MAGI under $242,000.

MAGI for most taxpayers is the same as the Adjusted Gross Income entry on line 11a of the 2025 Form 1040. This may vary for 2026 when the forms are released, as there have been changes to the Tax Code. We can help guide people through the rules, but a professional tax preparer should be consulted.