death of ROTH owner and 5 yr. rule
If the Roth owner is into the third year of conversion when he/she dies, do the beneficiaries have to wait the balance of the 5 years before withdrawing account earnings tax free? I presume the 10% penalty would not apply since it is an inherited Roth.
Permalink Submitted by mk foss on Thu, 2009-10-01 17:47
Beneficiaries of a Roth IRA must take RMDs beginning in the year after the death (except for the 2009 forgiveness). The distributions come first from contributions, then from conversions and finally from earnings. Earnings would not be tax-free until the 5 year period has elapsed. If they are just taking RMDs, they are not likely to reach the earnings in the two years of withdrawals before the 5 year period ends.