Ask Clark: What Should I Do if I Already Took My Required Minimum Distribution This Year?


Welcome to Ask Clark, a column designed to answer your financial questions by money expert Clark Howard.

What to Do if You Already Took Your RMD This Year

Julie from Florida: “I know that we don’t have to take an RMD this year, but if we did already take a distribution, can we roll it over or convert it into a Roth?”

Clark’s Take on What to Do if You Already Took Your RMD This Year

RMD stands for “Required Minimum Distribution.” It’s the amount of money that the federal government requires you to withdraw from your retirement account(s) when you reach a certain age.

Clark says: “Depending on when you hit age 70 and a half or 72, you have to each year take a certain amount of your retirement funds out and pay taxes on them,” Clark says.

“RMDs were suspended because of coronavirus, and so people were able to stop doing their RMDs. If they hadn’t done one, they didn’t have to take it. But if you already took the money, you can take that distribution and roll it over into something like a Roth IRA,” he says.

“You’ll still have to pay tax on the money as you would have, but then you have some money in a Roth that can grow tax-free. And if you never need the money the rest of your life, a Roth IRA is a great asset for your survivors to inherit, whereas a traditional IRA or traditional 401(k) money is lousy for somebody to inherit.”

Laws about RMDs are likely to change once the coranavirus pandemic ends. Here’s information on where those changes stand as of November 2020.

To hear Clark’s answer on this question and many more, listen to the full podcast episode here:  

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If you have a question but you don’t want to go on-air, contact Clark’s Consumer Action Center for free money help.

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