Dear Liz: I’m supposed to start required minimum distributions soon. Can I deposit my annual distribution into a Roth IRA? I understand that I have to pay taxes on the RMD, but if I can put it in a Roth, I would guess I don’t have to pay future capital gains taxes. I am retired and not working, so I wasn’t sure whether I can contribute to a Roth IRA.
Answer: You can’t. Contributions to IRAs, including traditional and Roth versions, require you to have earned income at least equal to the amount you’re contributing. Contributions are also limited to a certain dollar amount. In 2026, the limit is $7,500, plus $1,100 for people 50 and older.
There may be another way to get the tax-free growth you want. You can convert traditional retirement funds to a Roth IRA without earned income. Qualified Roth withdrawals are tax-free, and there are no RMDs during the original owner’s lifetime.
But late-in-life conversions can be tricky. Not only are conversions typically taxable, but they can temporarily raise Medicare premiums, subject more of your Social Security benefits to tax and push you into a higher bracket. You should consult a tax pro before converting.
Keep in mind that you can’t convert the RMD itself. You must take your required distribution for the year before converting additional money.
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