Getting inherited IRAs into "normal" tax-deferred accounts

My wife has an inherited Roth IRA and an inherited traditional IRA. She obviously has to take RMDs from both. This is annoying for two reasons: 1) In case of the inherited trad IRA, the RMD is taxable income. 2) In both cases, money is being forced out of the tax-deferred/tax-free umbrella.
The following strategy has occured to me to get these accounts into "normal" tax-deferred/tax-free accounts not subject to current RMDs. I'm curious if there's some downside I'm missing...
For the inherited Roth -- simply use distributions from the inherited Roth to fund contributions to her Roth (the earned income exists to cover this) rather than making the contribution from "outside" funds. For example, instead of making a $5,000 Roth contrib from checking account monies, take $5,000 out of the inherited Roth and use that to fund the Roth contribution. The downside I see to this is that one isn't actually increasing the Roth balance -- you're only "moving" it from a Roth subject to RMDs to one that isn't subject to RMDs. The upside, as mentioned before, is that once the "move" is complete the RMDs are gone and you're no longer having money forced out of the Roth umbrella.
For the inherited trad IRA -- this takes advantage of the fact that she has self-employment income and an existing solo 401(k). The idea would be that in years where the allowable solo 401(k) contribution is more than what cashflow/circumstances would allow, take a distribution from the inherited IRA and use that to fund a solo 401(k) contribution. Since both the distribution and the deduction are above the line, this will have no tax effect at all. However, over time it'll get the funds into a tax-deferred account not subject to RMDs until age 70.5. As described I see no downside to this scenario since it was assumed it would only happen when the allowable contribution is more than what would have been made even in the absence of the strategy. For example, say that in a given year SE income is such that the allowable solo 401(k) contribution is $23,000 but for cashflow/whatever reasons a contribution of only $7,000 is possible. Then, make the $7,000 contribution from "outside funds" but also take $16,000 from the inherited IRA to fund the full $23,000 allowable contribution.
What do you think?
Rich Carreiro                            rlc-news@rlcarr.com
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Rich Carreiro
I think you are mixing issues. This is human nature. For example, people will treat a $100 cash birthday gift differently than, say, a $100 bonus from work, or $100 in regular income. She can make those deposit to both her own Roth and her own 401(k) independent of those RMDs. If the proposed mental accounting makes her or you feel better about the process, that's fine.
On a side note, have you fully analyzed the Roth decision? You sure your retirement bracket with be high enough you prefer to pay current marginal rate and put post tax money into Roth?
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