Roth Bene IRA
Reading numerous discussion boards and articles relating to recent IRS decision on RMD’s, feel even more confused so looking for some clarity. My client was age 90 and passed in 2024, his 60 year old son is sole beneficiary of Roth IRA.
I found this info within an article. “ The new IRS decision will not apply to your account if you have an inherited Roth IRA. Under the 10-year rule, these accounts are not subject to required minimum distributions in years one through nine, no matter when the original account holder died. If you don’t need the money, you should leave the funds in your Roth IRA for as long as possible”.
I was under the impression even a Roth Bene IRA had to takes RMD’s during the 10 year distribution window but the article contradicts my thinking.
Permalink Submitted by Alan - IRA critic on Thu, 2024-05-30 03:52
The article is correct.
For a traditional IRA account, if the owner passes on or after RBD, annual beneficiary RMDs are required in years 1-9 of the 10 year rule, but if the owner passes prior to RBD, the annual RMDs are not required, just the 10 year deadline to drain the account.
Since Roth IRAs do not have RBDs because RMDs are not required, all Roth owners pass prior to RBD, and therefore all inherited Roth IRAs subject to the 10 year rule do not have annual RMDs as is the case for TIRAs where the owners pass prior to RBD.
But there is also a large tax difference because inherited Roth IRAs are generally tax free, so there is no need to avoid a large distribution at the end as there is with an inherited TIRA from which distributions are taxable. The Roth can be held to the end of the 10 years to allow more time for tax free earnings to accrue.