Inherited IRA funds transfer to a Roth IRA
Is it possible to transfer funds from an Inherited IRA to a Roth IRA without incurring penalty or the wrath of the IRS. In effect, this would defeat the distributions required
under an Inherited IRA, but I would like to combine IRAs for simplicity’s sake.
Thanks, Tim
Permalink Submitted by tomd37 on Thu, 2014-10-02 15:04
Assuming you already own the inherited IRA, you can convert it to a Roth IRA but the conversion will always be a taxable event. Just for our information, are you talking about an inherited spousal or non-spousal IRA? Inherited non-spousal IRAs must always be kept separate from any other IRAs you might own, traditional or Roth. In summary, no you cannot convert a tradtional IRA to a Roth IRA without paying federal tax on the distribution.Tom D.
Permalink Submitted by David Mertz on Thu, 2014-10-02 17:56
An inherited traditional IRA cannot be converted to an inherited Roth IRA. Only a surviving spouse can roll over a traditional IRA inherited from the deceased spouse, treating it as their own, and convert it to their own Roth IRA. Tim, if this IRA was not inherited by a surviving spouse, the IRA must forever remain an inherited traditional IRA (unless the law changes).
Permalink Submitted by tomd37 on Thu, 2014-10-02 20:22
DMx – Thanks for the correction. I was reading one thing and thinking another. Was aware of what you are saying but not thinking properly. Have personal experience elsewhere in the family in non-spousal inherited IRAs. Tim – My apologies to you for misleading you. Tom D.