457 Rollover to an Inherited Roth IRA
If a non-spousal beneficiary elects to rollover a 457 plan received from the original account holder to an Inherited Roth IRA, is the descendants’ RMD in the year of his death taxable? Since the funds being rolled over are taxed upon the conversion to the Inherited Roth, I’m guessing no tax is due on the RMD. Am I correct in this assumption? By the way, the original account holder passed after the RBD.
Permalink Submitted by Alan - IRA critic on Thu, 2015-12-03 04:31
The decedent’s RMD for the year of death is taxable to the decedent to the extent the decedent took the distribution, and taxable to the beneficiary if the beneficiary was required to complete the year of death RMD. The plan should not allow the direct rollover to the inherited Roth of any remaining year of death RMD amount. Therefore, only the remaining balance exclusive of that RMD can be directly rolled into the inherited Roth IRA and of course that amount would also be taxable in addition to the RMD.