Inherited IRA to Roth Conversion
Is their any prohibition on converting an inherited (spousal) traditional IRA in full or part to a Roth IRA?
Is their any prohibition on converting an inherited (spousal) traditional IRA in full or part to a Roth IRA?
Permalink Submitted by Al Fry on Mon, 2007-12-31 16:58
Yes, if it is in fact truly an inherited IRA. If it is the spouse’s own IRA, it can be converted to a Roth. If the spouse took it as an inherited IRA (sometimes done if under age 59 1/2), they could first roll it to themselves, then convert it to a Roth.
Permalink Submitted by Scott H on Thu, 2008-01-03 17:26
What if the benies are minors??
Permalink Submitted by Al Fry on Thu, 2008-01-03 18:40
Then it would not be a spousal inherited IRA, and could not be converted to a Roth IRA.
Permalink Submitted by Scott H on Thu, 2008-01-03 18:44
[quote=”[email protected]“]Then it would not be a spousal inherited IRA, and could not be converted to a Roth IRA.[/quote]
I thought the PPA of 2006 allowed more leeway in doing this, or is it limited to spouse only?
As Ed says, IRA rules are the trickiest……. 😯
Permalink Submitted by Alan Spross on Fri, 2008-01-04 22:06
The PPA has a section that allows non spouse transfers from an eligible retirement plan to an inherited TIRA, and that would include a Roth 401k account.
It also has direct Roth conversions from an eligible plan, but that only applies to the owners of those plans, not to non spouse beneficiaries.
But there is nothing to provide a non spouse beneficiary to create a Roth account from an account not formerly desigated as a Roth account.
Permalink Submitted by Al Fry on Fri, 2008-01-04 22:28
I fully agree, Alan. I can, however see why some might be mislead, by reading IRS Pub. 590, p. 57, under the major heading, “What’s new for 2007”, in the paragraph “Rollover by nonspouse bene”. Keep in mind, this is all part of “Chapter 2, Roth IRAs”. That paragraph should not be in that Chapter.
Permalink Submitted by Alan Spross on Sat, 2008-01-05 18:26
I never noticed that before, a glaring error for sure. The good news is that I pulled up the just released 2007 Pub 590 on the IRS site, and they have eliminated the tainted paragraph from “What’s New for 2007”.
Permalink Submitted by Denise Appleby on Sat, 2008-01-05 20:07
[quote=”[email protected]“]I fully agree, Alan. I can, however see why some might be mislead, by reading IRS Pub. 590, p. 57, under the major heading, “What’s new for 2007”, in the paragraph “Rollover by nonspouse bene”. Keep in mind, this is all part of “Chapter 2, Roth IRAs”. That paragraph should not be in that Chapter.[/quote]
Which is why I do not like to cite Pub 590- or any of the other IRS Publications , unless I have been able to read it cover to cover . Almost every year- they include errors . They usually correct these errors, which is why it’s not a good idea to print a hard copy.
They are only human after-all, and will make errors. And it seems like the Publications do not go through the fact-checking that their citable sources go through