Grandson inherits Roth IRA…
we have a client that is inheriting his grandfather’s Roth IRA…can you please confirm whether or not our client would have to begin taking Bene Roth RMD’s this year or will it begin 2015?
Deceased:
Birth date 6/20/1923
Date of Death: 4/4/2014
Clients birth date 5/21/1977
Permalink Submitted by tomd37 on Thu, 2014-05-22 16:48
The RMD period starts the year after the death of the owner and must be completed by December 31, 2015. Table I (Single Life Expectancy) in IRS Publication 590 would be used by the beneficiary. The age used would be the age attained by the beneficiary as of 12/31/2015 (38) and the resulting life expectancy factor (45.6) is used the first year and is reduced by 1.0 in each succeeding year. I believe (although not absolutely sure) the value of the Roth IRA as of 12/31/2014 is used and that value is divided by the life expectancy factor (45.6) to determine the 2015 RMD. Maybe others will respond confirming my thinking. Tom D.
Permalink Submitted by Alan - IRA critic on Thu, 2014-05-22 18:18
Tom is completely correct. If decedent made his first Roth contribution prior to 2010 (or prior to 2011 if first distribution will not be until 2015) the Roth is fully qualified meaning the client does not need to report any distributions on Form 8606, just on line 15a of Form 1040. Akso, client should name his successor beneficiary ASAP on the inherited Roth.