Before clients convert their traditional IRAs to Roths, they should be aware of a new rule that says all this year’s required minimum distribution (RMD) be taken out first, according to a new analysis by Andy Ives at Ed Slott & Co., the IRA consultant firm in Rockville Centre, N.Y.

“RMDs have always had to be taken before any Roth IRA conversion,” Ives wrote. “The difference now is that ALL of a person’s total aggregated IRA RMDs must be withdrawn prior to a conversion—not just the RMD on the account being converted.”

RMDs are the minimum amount that retirement-account holders who are age 73 or older must withdraw every year on all of their IRAs and 401(k)s, except for Roths. They are calculated by dividing the value of each IRA—or 401(k)—at the end of the previous year by the client’s remaining life expectancy, as determined by the IRS.

Since Roth accounts are funded with after-tax dollars, they are exempt from RMDs.

But converting an IRA to a Roth IRA will not get the client out of taking this year’s required minimum distribution, due before the year ends. Moreover, all RMDs owed on all IRAs must be satisfied before any one account is converted. This new rule, which was released in July as part of the final ruling on the SECURE Act, is different from how RMDs and conversions were processed in the past, Ives wrote. It used to be OK to take only the RMD that was due on the converted account, and put off any others till the end of the year.

What hasn’t changed is that clients who own multiple IRAs must calculate the required minimum distribution amount due from each one individually. The total of all those RMDs can be withdrawn from any or all of the accounts. This must be done before year’s end. The difference now, Ives explained, is that it must also be done before any Roth conversions can be completed.

For example, if a client has three IRAs and wants to convert one of them to a Roth, the client must first take the aggregate RMD amount that’s due from all three accounts combined—taking it from one, some, or all of the accounts—before any one of them can be converted. The client can’t just take the RMD from the converted account and wait to take RMDs from the others later, Ives wrote.

“Sequencing matters,” he added.

Neglecting to do things in this order can be costly, he said in the analysis. Clients who complete a Roth conversion before taking the entire RMD amount required this year will have whatever amount remaining of their aggregate RMD before the conversion automatically removed from the Roth IRA, in accordance with “excess contribution corrective measures,” he wrote.

Clients who do Roth conversions must also pay taxes on the converted amount, experts say. But the conversion itself does not remove the obligation to make RMD withdrawals (and pay taxes on them) before the end of the year. “RMDs cannot be rolled over or converted,” Ives wrote. “Ergo, the RMD must be taken prior to any conversion.”