Required minimum distributions (RMDs) are a reality of tax advantaged accounts. Once you pass the age threshold, you’re required to withdraw a certain proportion of your traditional retirement accounts annually as a taxable distribution.
Planning these RMDs and managing the subsequent taxes is an important component of successful retirement planning. Investors often ask if they can do a Roth conversion instead of an RMD. Unfortunately, a Roth conversion isn’t considered a distribution for RMD purposes.1
That said, there are ways to use Roth IRAs strategically to support your long-term investment planning. Let’s review the rules for RMDs and then go over some options you might consider.
Owners of traditional retirement accounts, including IRAs, 401(k)s, 403(b)s, must take RMDs annually once they pass the age threshold, which is currently 73.
RMDs for a given calendar year are based on the ending balance in the account on December 31 of the prior calendar year, and RMDs must be taken by the end of the applicable calendar year. For example, if you’re subject to RMDs this year, they’re based on the balance in the relevant accounts as of December 31, 2024, and you must take the distribution by December 31, 2025.
There are nuances about delaying your very first RMD and how you can take your RMD if you have multiple applicable accounts, but the key information is this: You must take RMDs, and RMDs are taxed as ordinary income, like payroll income.
Roth IRAs offer three main benefits to investors that make them a popular option.
And, yes, Roth conversions can serve to reduce the amount of future RMDs by lowering the balance of the account(s) subject to RMDs. But there are some specific requirements investors need to keep in mind.
While you can convert all or a portion of a traditional IRA or other traditional retirement account to a Roth IRA—and many people do—there are sequencing rules once you’ve passed the age threshold for RMDs.
Specifically, your RMD for the year must be satisfied before doing a Roth conversion. Further, the conversion can’t be used to satisfy your RMD in part or in total. They must be two separate events, each taxed according to the relevant rules.
Deciding when (or if) to do a Roth conversation often comes down to taxes. Taxes must generally be paid on the Roth IRA conversion for the year in which the conversion is made. If your income in a particular year is lower than normal, a Roth conversion might be a good strategy for that year. Conversely, if your income in a particular year is higher than normal, a conversion might not make sense.
One useful note? Money from your RMD can be set aside to cover taxes that apply to a Roth conversion.
While there’s no way to make a direct contribution to a Roth IRA using RMD money, you can certainly set the RMD money aside and earmark some or all of it (depending upon the amount of the RMD) for a Roth IRA contribution.
Roth IRA contribution rules are based on earned income, which is income from employment or self-employment. Earned income doesn’t include investment income, interest earned, or other passive forms of income. If you have earned income, then you’re likely eligible to contribute to a Roth IRA, which would put that money back to work in the market in a tax-advantaged way.
However, there are also income limitations on Roth IRA contributions. While you must have earned income in order to contribute, the income limits are based on your Modified Adjusted Gross Income (MAGI), which includes not just your earned income, but also investment income, interest earned, and more.
There are income limits above which your ability to contribute to a Roth IRA may be reduced or eliminated altogether. For 2025 these income limits are:3
| Filing status | Modified Adjusted Gross Income (MAGI) | Contribution limit if under 50 | Contribution limit if age 50 or over |
|---|---|---|---|
| Single | Less than $150,000 | $7,000 | $8,000 |
| Greater than or equal to $150,000 but less than $165,000 | Contribution level is phased out | Contribution level is phased out | |
| $165,000 or more | No contributions allowed | No contributions allowed | |
| Married filing jointly | Less than $230,000 | $7,000 | $8,000 |
| Greater than or equal to $236,000 but less than $246,000 | Contribution level is phased out | Contribution level is phased out | |
| $246,000 or more | No contributions allowed | No contributions allowed |
There is a way to reduce your RMDs. For those who are charitably inclined and who may not need some or all of the money from their RMDs, a QCD (qualified charitable distribution) can be a tax-efficient way to make charitable contributions and also reduce the amount of future RMDs.
QCDs must be made payable to qualified charitable organizations. If your RMD has not already been satisfied for the year, then the QCD can be used to satisfy some or all of it—and the portion of your RMD that’s satisfied via a QCD won’t be subject to federal taxes.
There are some limitations: You must be at least age 70 ½ to do a QCD, and the limit on QCDs for 2025 is $108,000. The latter is adjusted annually for inflation.
RMDs are a fact of retired life when you have traditional retirement accounts. While you can’t satisfy the RMD with a Roth conversion, there are other ways to lower your future RMD obligations and satisfy this year’s obligations while supporting your long-term financial plan.
It can be complex, so be sure to understand the tax ramifications of your choices. A financial planner can help you navigate the specifics of your personal situation.