Inherited ROTH IRA

[Carbonate24]

I posted a link two years ago about an inherited Roth IRA and got some good feedback… In the meantime, the rules seem to have evolved a bit, so I’m looking for feedback on what resources (I.e. websites in addition to the IRS site), describe the schedule of which withdrawals need to be on an inherited Roth IRA. I continue to find some websites that say the rules are not final final, and so you don’t have to start taking out distributions each year for 10 years… And I find other websites that say while the rules aren’t final, it’s advisable to go ahead and treat them as final And begin drawing out 10% every year for 10 years

Got an advice is much appreciated

[jebmke]

I would start with the IRS site; Publication 590b

[minesweep]

IRS Ends Inherited IRA Confusion: Annual RMDs Required for Many

IRS issues final rules for inherited IRAs

[retired@50]

IRS Ends Inherited IRA Confusion: Annual RMDs Required for Many

From the Kiplinger article above...

Exceptions to the rules

However, the regulations do provide some flexibility regarding annual distributions.

If the original account holder passed away before reaching their RMD age, beneficiaries have more leeway in timing their withdrawals within the 10-year window.
But the account must still be emptied by the end of the 10 years.

My bold emphasis above. Since all Roth IRA owners pass away before they reach their RMD age, that means that all inherited Roth IRAs can be ignored for years 1-9, and drained in year 10.

The reason ALL Roth IRA owners pass away before their RMD age is because Roth IRAs don't have RMDs to begin with. So no one can ever get old enough to enforce an RMD on a Roth IRA.

Regards,

[Alan S.]

But if the Roth beneficiary is an EDB (eligible designated beneficiary) then the 10 year rule will not apply and there will be annual RMDs due each year.

If the EDB beneficiary wants to they could opt out of EDB treatment and back into the 10 year rule with no annual RMDs, but that would usually be a poor decision.

[Carbonate24]

Thanks folks, this gives me some materials to study and information to process.

[JBTX]

I posted a link two years ago about an inherited Roth IRA and got some good feedback… In the meantime, the rules seem to have evolved a bit, so I’m looking for feedback on what resources (I.e. websites in addition to the IRS site), describe the schedule of which withdrawals need to be on an inherited Roth IRA. I continue to find some websites that say the rules are not final final, and so you don’t have to start taking out distributions each year for 10 years… And I find other websites that say while the rules aren’t final, it’s advisable to go ahead and treat them as final And begin drawing out 10% every year for 10 years

Got an advice is much appreciated

The rules you are referring to relate to inherited traditional IRAs. The rules are now final and distributions are required before year 10.

However, for Roths, there are no distributions required before year 10.

[Dregob]

I posted a link two years ago about an inherited Roth IRA and got some good feedback… In the meantime, the rules seem to have evolved a bit, so I’m looking for feedback on what resources (I.e. websites in addition to the IRS site), describe the schedule of which withdrawals need to be on an inherited Roth IRA. I continue to find some websites that say the rules are not final final, and so you don’t have to start taking out distributions each year for 10 years… And I find other websites that say while the rules aren’t final, it’s advisable to go ahead and treat them as final And begin drawing out 10% every year for 10 years

Got an advice is much appreciated

The rules you are referring to relate to inherited traditional IRAs. The rules are now final and distributions are required before year 10.

However, for Roths, there are no distributions required before year 10.

Before year 10 or in year 10? If the owner dies in 2029, year one is 2030 and year 10 is 2039. Does the money have to be withdrawn in 2038? I believe it is during year 10/2039? But I may be wrong.

[toddthebod]

I posted a link two years ago about an inherited Roth IRA and got some good feedback… In the meantime, the rules seem to have evolved a bit, so I’m looking for feedback on what resources (I.e. websites in addition to the IRS site), describe the schedule of which withdrawals need to be on an inherited Roth IRA. I continue to find some websites that say the rules are not final final, and so you don’t have to start taking out distributions each year for 10 years… And I find other websites that say while the rules aren’t final, it’s advisable to go ahead and treat them as final And begin drawing out 10% every year for 10 years

Got an advice is much appreciated

The rules you are referring to relate to inherited traditional IRAs. The rules are now final and distributions are required before year 10.

However, for Roths, there are no distributions required before year 10.

Before year 10 or in year 10? If the owner dies in 2029, year one is 2030 and year 10 is 2039. Does the money have to be withdrawn in 2038? I believe it is during year 10/2039? But I may be wrong.

Yes, December 31, 2039.

[arcticpineapplecorp.]

Before year 10 or in year 10? If the owner dies in 2029, year one is 2030 and year 10 is 2039. Does the money have to be withdrawn in 2038? I believe it is during year 10/2039? But I may be wrong.

from Pub 590-B
:

10-year rule. The 10-year rule requires the IRA beneficiaries who are not taking life expectancy payments towithdraw the entire balance of the IRA by December 31 of the year containing the 10th anniversary of the owner’s death. For example, if the owner died in 2023, the beneficiary would have to fully distribute the IRA by December 31, 2033.

so withdraw by Dec 31st of the 10th year FOLLOWING the year of death of the original account owner.