Can I use my annuity RMDs to fund a Roth IRA?


Q. I have an annuity in my IRA. I started to annuitize it this year. I need to convert/contribute the same amount to a Roth IRA. Can I contribute the monthly payout to the Roth IRA?
— Unsure

A. There’s a lot to consider here.

A lot of rules.

Annuities in an Individual Retirement Arrangement (IRA) account have their own set of rules, depending on the type of annuity, said Deva Panambur, a fee-only planner with Sarsi, LLC in West New York.

He said insurance companies that issue annuity contracts also have their own set of rules.

Given all that, we would need more details to answer your question thoroughly.

But here’s what you should consider.

In general, for annuities in an IRA, Required Minimum Distributions (RMDs) must begin by April 1 of the year following the year in which you reach age 73, Panambur said.

“Payments from annuities are designed such that they satisfy their own RMD,” he said.

Then, withdrawals from an IRA or annuity before the age of 59.5 will incur an additional 10% tax unless you qualify for certain exceptions such as death, disability or health insurance premiums after job loss, he said.

But there is an exception to the RMD by age 73 rule. This exists for Qualifying Longevity Annuity Contracts purchased in an IRA. In this case, you can delay your RMD till you are 85, Panambur said.

But, RMDs cannot be used to contribute to a Roth IRA, he said.

“However, separate from the RMD, if you have earned income, you can contribute to a Roth IRA if you qualify based on your income,” he said. “In 2024, you can contribute as much as $7,000 with an additional $1,000 after the age of 50 if your modified adjusted gross income is below $146,000 for single filers and $230,000 for married couples filing jointly.”

You can do a partial or full Roth conversion of the annuity in your IRA, he said.

“This is something you may want to explore depending on your situation and the terms of the annuity contract,” he said. Roth conversions do not incur the 10% early distribution penalty irrespective of age, and they do not have any income limits.”

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This story was originally published in May 2024. presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.