Spousal Roth IRA
We have a client that has a large Roth IRA. He has recently deceased. Client’s estate is upward of 20 million. I’m assuming estate plans have been set up. My question is this: On the Roth IRA- client’s wife is beneficiary. Since it is spousal is this as simple as transferring the assets into a Roth for the wife to keep the tax free status? Also is this Roth includable in the gross estate? I assume yes on that one. Thanks very much. This is a great forum.
Permalink Submitted by Alan - IRA critic on Wed, 2015-08-05 18:30
Yes, the spousal rollover is that simple. The spousal beneficiary should roll the Roth over to her own Roth and then it is treated as if she owned it all along. As long the decedent first contributed to it before 2011, it is fully qualified and tax free. Or if the wife had her own Roth that is already qualified, the decedent’s Roth rolled to her Roth will also be qualified even if decedent did not contribute prior to 2011. Roth IRAs are included in gross estates but with an estate of 20mm such issues as portability and continued estate planning for the wife will be critical.