Inherited Roth IRA distributions

Submitted by Barbara Kong on Tue, 2018-01-23 15:53

Our client passed away in 2017 at age 80. Five years ago his wife died at age 62. Our client was the beneficiary of the wife’s Roth IRA. He chose to leave the Roth IRA as a beneficiary IRA so that he did not have to take distributions.
Now that he has passed away, our question is about his beneficiaries for the inherited Roth IRA. The beneficiaries are his 2 daughters (ages 50 and 55).
1. Can the daughters use their life expectancy to stretch the IRA or do they use his (or the original owner’s) life expectancy?
2. There was no distribution from the inherited IRA in 2017. Does a distribution from the inherited Roth IRA have to be first distributed to the deceased husband’s estate before distributions are made to the daughters?

Thank you



Submitted by Alan - IRA critic on Tue, 2018-01-23 17:08

  1. Yes, they can create separate inherited Roth accounts and use their respective life expectancies based on their ages as of 12/31/2018. The reason that this is allowed is due to the client’s passing before beneficiary RMDs were required. As a sole spousal beneficiary (he MUST have been the sole beneficiary) client was not required to take beneficiary RMD until the year his spouse would have reached 70.5, and she did not reach that age. Client is therefore treated as if he OWNED the Roth IRA for purposes of his beneficiary’s RMDs. 
  2. There was no RMD required for 2017. If there had been one required but not completed, it would have been distributed to daughter beneficiaries, not to client’s estate.
  3. This would have been clearer if client had assumed ownership of wife’s inherited Roth, but no harm done in this case.

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