Required Minimum Distributions and Roth conversions

If you are over a certain age, you must take your Required Minimum Distribution (RMD) before you can convert your Traditional IRA to a Roth IRA.

The conversion process on our website includes a step to do this. Note that IRS rules allow you to take your total RMD from one or more IRA accounts, including those not held at Betterment. Therefore, you can choose to take your RMD from Betterment or from a different IRA account. The IRS is not kind to people who do not take their RMD on time. There is a 50% penalty on any RMD amount that you didn’t take. However, if you do miss your RMD, there is a potential waiver available in the case of a reasonable error.

Please consult a tax advisor or IRS Publication 590 for additional information related to your specific situation.

This article is intended for educational purposes only. The information provided is educational in nature, and is not intended to be relied upon as financial or tax advice. Investing in securities involves risks, and there is always the potential of losing money when you invest in securities. When deciding whether to roll over a retirement account, you should carefully consider your personal situation and preferences. The information on this page is being provided for general informational purposes and is not intended to be an individualized recommendation that you take any particular action. Factors that you should consider in evaluating a potential rollover include: available investment options, fees and expenses, services, withdrawal penalties, protections from creditors and legal judgments, required minimum distributions, and treatment of employer stock. Before deciding to roll over, you should research the details of your current retirement account and consult tax and other advisors with any questions about your personal situation.