Can I Use My RMDs to Transfer Money Into My Roth IRA?

Once you turn 73 (or 75 if you were born in 1960 or later), you’ll need to take required minimum distributions from any tax-deferred retirement accounts you own. You might be asking this question: Can you use an RMD to transfer money to a Roth IRA? No, IRS rules do not allow that. You could, however, use an IRA conversion to take advantage of Roth tax benefits. 

A financial advisor can help you build and expand your financial and retirement plan. Speak with an advisor today.

RMD Transfers and Roth IRA Conversion Rules

You can’t use your required minimum distributions to contribute money to a Roth IRA. The IRS requires you to take RMDs from pre-tax accounts because if you didn’t, you could defer paying taxes on the money indefinitely. Roth IRAs, meanwhile, offer a significant tax benefit, because qualified distributions are 100% tax-free. 

For a Roth IRA distribution to be qualified, these conditions must be met:

• You must be 59 ½ or older
• Your account must have been open for at least five years before the distribution

If both are true, no taxes or penalties apply to the distribution. That’s what makes Roth accounts so attractive: You can draw that income in retirement without inflating your tax bill. If you were to use an RMD transfer to fund a Roth IRA directly, you’d effectively skirt around taxation, which is a no-no for the IRS. 

That’s where the Roth IRA conversion comes in. An IRA conversion allows you to convert traditional IRA assets into a Roth account. There is a catch, of course. You must pay taxes on the amount you convert in the year the conversion occurs. That could mean a temporarily larger tax bill, but you get the benefit of tax-free distributions later. You must also take any RMDs for the year before the conversion occurs. 

Keep in mind that you risk a tax penalty if you don’t take your RMDs as scheduled. The penalty is equal to 25% of the amount you were required to withdraw. If you withdraw less than the full amount or nothing at all, you could face a hefty tax bill. 

Make a Direct Roth IRA Contribution Instead

If you don’t want to go through the tax hassle of converting traditional IRA assets to a Roth IRA, you may have another option. You could make a direct contribution to a Roth IRA if two things are true:

• You have earned income for the year
• Your earned income is within allowed thresholds for your tax filing status

The IRS defines earned income as money you get for working, such as wages, commissions, bonuses, tips and honorariums for speaking, writing or taking part in a conference or convention. Income generated by self-employment also counts. 

Income that doesn’t qualify includes taxable pension payments, interest income, dividends, rental income, alimony and withdrawals from Roth IRAs or other nontaxable retirement accounts. Annuities, welfare benefits, unemployment compensation, workers’ compensation payments and your Social Security income don’t count as earned either. 

Assuming you have earned income, either from working a job in retirement or something else, your ability to fund a Roth IRA hinges on your income. You can make a full contribution for 2025 if:

• You file single or head of household and your modified adjusted gross income (MAGI) is less than $150,000
• You’re married and file a joint return, and your MAGI is less than $236,000 

Once your income passes these limits, the amount you can contribute to a Roth IRA is reduced. If your income exceeds $165,000 or $246,000 respectively, you can’t contribute anything at all. Married couples who file separate returns are always subject to a $10,000 income limit. 

For 2025, the maximum Roth IRA contribution limit is $7,000 or $8,000 if you’re age 50 or older. The IRS increases these limits periodically, so the amounts for 2026 and future years may be higher. 

You also need to remember to wait five tax years after your first contribution to any Roth account before you can make withdrawals. Otherwise, you may have to pay income tax and penalties on the distributions. Heirs who inherit your Roth will need to withdraw the entire balance within 10 years.

Consider speaking with a financial advisor to develop a tax-efficient retirement strategy.

Other Options for RMDs

If you don’t qualify to make a Roth contribution, you still have options to eliminate, reduce or delay your RMDs.

Donate Your RMDs to Charity

If you’re at least 70 ½, you can use a qualified charitable distribution to donate some or all of your RMD to a charity recognized by the IRS and you won’t be taxed on the donated amount. To qualify, the money must be transferred directly from your IRA to the charity.

Keep Working

Your 401(k) account with your current employer isn’t subject to RMDs if you’re still on the payroll and don’t own more than 5% of the company. One tactic is to roll 401(k)s from previous employers into your current plan so that they won’t be subject to RMDs. Once you stop working, however, RMDs are required.

Remember the Penalty

It’s worth a reminder that the punishment for failing to take an RMD during the required time period is a hefty one—up to 25% of the missed RMD amount. The IRS reduces the penalty to 10% if you correct it and take the required distribution within two years.

Estimate your annual RMDs to see how they fit into your broader retirement picture. SmartAsset’s RMD Calculator gives you a snapshot of your withdrawal obligations.

Pay Attention to All of Your Taxes

Structuring your retirement withdrawals to reduce your tax bite means looking at all your sources of income, including retirement accounts, RMDs, Social Security benefits, pensions and taxable investment income. Otherwise, you may miss out on opportunities to minimize your tax bill or potentially cost yourself more in taxes. 

For example, some people may find that withdrawing money from an IRA early in retirement can reduce the size of their eventual RMDs. If they also delay collecting their Social Security benefits, their benefit increases by 8% each year until they reach 70 years old. If you’re married, be sure to coordinate taxes, withdrawals and RMDs between spouses.

Other common retirement tax moves include investing in tax-free bonds, moving to a state with no income tax or estate tax, harvesting tax losses in taxable investment accounts and holding any taxable assets long enough to qualify for lower long-term capital gains tax rates.

A financial advisor can help you examine your tax outlook in retirement.

Bottom Line

While you can’t use RMDs to transfer money to a Roth IRA, you can still make Roth contributions if you’re eligible. Keeping some of your retirement assets in a pre-tax account and some in a Roth account can help you diversify your holdings from a tax perspective. Take the time to estimate your retirement taxes before you start collecting pensions, Social Security and taking withdrawals from retirement accounts.

Financial Planning Tips

• A financial advisor can take a comprehensive look at your finances and help manage retirement plans. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
• Make sure you’re protecting your cash reserves from inflation by securing them in an account that generates a competitive interest rate. Leaving cash in a checking account or low-yield savings account can stifle your purchasing power over time.

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