By Sarah Brenner, JD
Director of Retirement Education
Question:
Since I retired in 2020, each year I have been converting amounts from my employer plan to my Roth IRA. I will be age 73 in 2026. Can I take my required minimum distribution (RMD) amount and convert that to my Roth IRA?
Thanks,
Thomas
Answer:
Hi Thomas,
Unfortunately, this strategy will not work. You can continue to convert funds from your employer plan to a Roth IRA, but your RMDs cannot be converted. However, you can take the RMD and, once that is satisfied, continue to convert funds from the plan to your Roth IRA.
Question:
I retired from my job at age 53. I still have money in my former employer’s 401(k) plan. Now, I am age 57. I was told that since I separated from service and I am now over age 55 that I can take penalty-free distributions from my 401(k) plan. Can you please help clear this up for me?
Thank you for your help!
Gayle
Answer:
Hi Gayle,
Until you reach age 59½, any distribution that you take from the 401(k) plan would be subject to the 10% early withdrawal penalty unless an exception exists. There is an exception to the penalty for distributions taken when you separate from service in the year you reach age 55 or later. This exception would not work for you because even though you are over age 55 now, you separated from service when you were only age 53. It is the age at separation from service that matters and not the age at the time of the distribution.
If you have technical questions you would like to have answered, be sure to submit them to mailbag@irahelp.com, to be answered on an upcoming Slott Report Mailbag, published every Thursday.
https://irahelp.com/slottreport/roth-conversions-and-401k-distributions-this-weeks-slott-report-mailbag/