There are two separate IRS rules stacked on top of each other here, and conflating them is where the confusion comes from. First, RMDs are specifically ineligible for rollover treatment, meaning the specific dollars distributed to satisfy your required minimum distribution cannot be redeposited into any IRA, including a Roth, within the usual 60-day rollover window. Second, separately, a Roth IRA contribution (as opposed to a rollover or conversion) requires the contributor to have qualifying compensation, wages, salary, or self-employment income, and an RMD does not count as compensation no matter how large it is.

The workaround, when it exists, isn't really a workaround, it's just two normal transactions happening in the same year: take the RMD you're required to take, pay the tax on it like any other year, and separately make a Roth IRA contribution funded from any source of money you have, savings, a paycheck, whatever, as long as you or your spouse has enough earned income to support the contribution amount and your household is under the Roth income limits. The RMD and the Roth contribution aren't linked; they just happen to both be showing up on the same tax return.

This means the strategy is really only available to retirees who are still working in some capacity, part-time consulting, a post-retirement job, self-employment income, while also being old enough to be subject to RMDs. That's a specific but not rare situation: plenty of people work past 73 by choice, and for that group, taking the RMD and funding a Roth IRA in the same year with employment income is entirely legitimate.

There's a MAGI trap worth watching closely. RMDs count as ordinary taxable income and raise MAGI just like any other IRA distribution. If a household's income is already close to the Roth contribution phase-out range, adding a large RMD on top of earned income can push MAGI over the limit and eliminate Roth eligibility for the year, even though the earned-income requirement was otherwise satisfied.

For retirees who don't have earned income and want to move pre-tax IRA money into a Roth structure, the actual tool is a Roth conversion, not a Roth contribution. A conversion has no earned-income requirement and no income limit, but critically, the RMD for the year must be satisfied first and cannot itself be converted; only amounts above the RMD are eligible to convert.

If you're retired, taking RMDs, and have no earned income, funding a Roth IRA directly with RMD money isn't available to you under any circumstance, the earned-income requirement is the real wall, not a paperwork technicality to work around. A Roth conversion of amounts above your RMD is the tool that actually applies to your situation.

If you're still working in retirement, part-time consulting, self-employment, a post-retirement job, and also subject to RMDs, check both the earned-income amount and your household's MAGI against the current Roth contribution limits before assuming you qualify. Both conditions have to hold at the same time.

• Assuming RMD dollars can be rolled into a Roth IRA directly, they're specifically excluded from rollover treatment.
• Confusing a Roth contribution (which requires earned income) with a Roth conversion (which doesn't), these are governed by entirely different rules.
• Not checking whether the RMD itself, stacked on top of earned income, pushes household MAGI over the Roth contribution limit.
• Overlooking that a Roth conversion still requires the RMD to be satisfied first, and only the amount above the RMD is eligible to convert.