Inherited Roth IRA Not Claimed by Beneficiary Before Death
Wife, age 80, died in 2024. Held Roth IRA with Vanguard (for 20+ years) that named husband as beneficiary. Husband, age 85, died in 2025 prior to claiming. Estate is being probated, and Personal Representative notified Vanguard. Vanguard retitled as: John Doe (husband)/Roth IRA VFTC as Custodian/Benef Jane Doe (wife). Pourover Will directs assets to Revocable Living Trust (became irrevocable upon husband’s death), which names 3 adult children as trust beneficiaries.
Does estate have to take RMD for 2025? Does estate get to name successor beneficiary(ies), and if so, is it the Trust or the children? If estate doesn’t take RMD for 2025, does successor beneficiary(ies) (either the Trust or the children) have to?
Permalink Submitted by Alan - IRA critic on Mon, 2025-08-18 12:24
VG will have to retitle the inherited IRA showing the trust as the beneficiary of John Doe.
Because John was the original beneficiary and an EDB, the trust is a successor beneficiary and must take annual beneficiary RMDs over his remaining LE of 8.1 years and pass them through to the trust beneficiaries on a K 1.
The trust provisions will determine if the trustee has the authority to assign portions of the inherited Roth out of the trust to each of the trust beneficiaries. VG would have to accept the assignment requests. If they do then each trust beneficiary will have their own inherited Roth IRA (again retitled), but this has no effect on the RMDs. They would have the same 8.1 years to drain the inherited Roths, which is not much shorter than the 10 years they would have had if they had been named by John as direct beneficiaries, but annual beneficiary RMDs will be required.
Regardless of how this plays out, all distributions will be tax free because the inherited Roth is qualified.
NOTE: All Roth owners pass prior to RBD, despite their ages. Since Jane passed prior to RBD, her beneficiary does not have the option to use HER longer LE for RMDs, they must use John’s older age. The 2025 beneficiary RMD for John will have to be completed by the trust, but because this is a year of death RMD, it is not due until the end of 2026, with the extra time probably needed before the trustee (or beneficiaries if assignment is successful) will be able to complete that distribution.