Death within 5 year Roth conversion window
What happens if my client should die within the 5 year window after doing the Roth Conversion from his traditional IRA? Does it automatically go away and beneficiaries can take distributions tax-free or must they wait out the remaining period of time to meet the 5 year timeframe?
Permalink Submitted by Al Fry on Mon, 2008-12-29 20:13
Non spouse benes must start RMDs by 12.31 in the year following death of owner. With a Roth IRA, cost basis comes out first. So, if all they take out is the RMD, they would not exceed cost basis before the five year period would expire. After that, all withdrawals would be tax free, including earnings.