Last edited Sun Jan 12, 2014, 11:18 PM - Edit history (1)
RMD = Required Minimum Distribution
You do not have to take any money from it at all and you can contribute to it as long as you have earned income.
The RMD rules do apply to a beneficiary however, in a similar fashion to traditional IRA's.
IRS Publication 590 has the details.
The section on Roth IRA's begins on page 62;
http://www.irs.gov/pub/irs-pdf/p590.pdf
"Do you know if it could be converted a bit at a time to help reduce the taxes? I'm guessing the entire amount would be taxed as ordinary income, and depending on what that sum does to my total income for the year would determine how much taxes involved, yes? Or, depending of course on any other income, it may not make a difference so perhaps is best to convert it all at once."
The answer to the question beginning with the second sentence is yes, absolutely. Traditional IRA's, 401(k)'s and 403(b)'s all contain money that has yet to be taxed, basically. It's taxed when you take a distribution and yes, it's taxed as ordinary income for the year in which you take it out. If your regular, earned income is right under the next tax bracket and a distribution will put your AGI into the next higher bracket, then yes, you are going to pay a larger share of it in taxes. If however your income is such that a distribution won't move you up another bracket, then the rate will be the same as what you are paying on your wages. The answer to the question in the first sentence therefore is "it depends". It depends on your other income.
If you aren't sure what those brackets are/were for 2013,
here's the IRS page for you to check them out.
If you are older than 59 1/2 you can take distributions from your 403(b) as you wish. There is no rule that I can find that prohibits you from rolling those into a Roth. So, yes you could do it over the course of a couple years, as far as what I gather from reading Pub 590 and what I recall.
I would rather not give you a definitive yay or nay here, so please ask your FA. It has been a while since I dealt with this stuff on a daily basis and it's apparent I'm a bit rusty!
If I remember correctly, back in 2008-09, the IRS allowed monies from Traditional IRA's and similar accounts to be converted to a Roth with no limitations. They also allowed those conversions to be done over the course of 2 years. I do not know whether or not that has expired.
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