beneficiary IRA and roth conversions
Client is inheriting retirement accounts from his wife who died earlier this year. We will put it into a beneficiary IRA, since the client is only 50 and wants to keep penalty free access.
Client has a small IRA of his own that I would like to convert to a Roth.
does the beneficiary IRA count in the proportionality rules for a Roth conversion?
If yes, can I just leave the money in the spouses name in the current plan and not move it to a beneficiary IRA until January so I can do the Roth conversion this year?
thanks.
Permalink Submitted by Alan - IRA critic on Mon, 2016-10-10 23:20
The beneficiary IRA is NOT considered in determining the taxable portion of a TIRA distribution or conversion. If the inherited IRA includes basis, a separate 8606 form would be used to determine the taxable portion of a distribution from the inherited account. Client should not delay re titling the inherited IRA, so he can name his own successor beneficiary on that account. If he is sole beneficiary RMDs do not start until his wife would have reached 70.5, but he will probably roll it over after he reaches 59.5.