Bene IRA to TIRA

Submitted by Wendy Mommaerts on Mon, 2015-12-21 14:06

We have a client who established a beneficiary IRA in 2012 and is now looking to do a Roth conversion. Are there any restrictions on re-registering the beneficiary IRA to an IRA in her name at any time or do we have to wait until she is 59 1/2?

OR, I don’t believe we can do this, can the client do a Roth conversion directly from the beneficiary IRA?



Submitted by Alan - IRA critic on Mon, 2015-12-21 17:34

  • The client must be a surviving spouse to convert to a Roth IRA. Assuming that is the case here, the client can request the spousal rollover and the Roth conversion at the same time. It could be done directly, but some IRA custodians may want to use a two step process if their processing platform requires. The mechanics do make a difference if either the inherited IRA or client’s own IRA have basis. Whichever has the highest basis % should be the source of the conversion as that would reduce taxes on the conversion. Otherwise it does not matter whether the conversion is done directly or following a spousa rollover to a TIRA,
  • Note that if the deceased spouse would have now reached 70.5, client would have beneficiary IRA RMDs. The spousal rollover will erase the current year RMD if there is one, so the entire balance can be rolled over or converted.

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