Inherited Roth – reinvesting over 10 yr Secure rule

Submitted by helen roland on Fri, 2020-03-06 08:45

I am 75 yrs old. Scenarios – Son inherits my Roth IRA. Is it best (at this volatile time) to invest my Roth in a (Security Benefit) Strategic 10-yr Growth Annuity (can’t lose in down market) – for 10-20 years so this Roth account under the 10-year secure act, will continue to grow (remaining in my name)? Or if son inherits my Roth equity stock account losing money at time of my death, can he move out of stock market to another vehicle to make interest in the 10-year secure holding period? At the time of my death, does the Roth in my name freeze in whatever investment vehicle I chose while living? Or, at time of my death, he has to retitle these investments above as “Inherited Roth with my name”? Can he move these “retitled” Inherited Roths under my name to other investment vehicles over the 10-yr period?



Submitted by Alan - IRA critic on Fri, 2020-03-06 15:49

  • When he inherits your Roth IRA, he must have it retitled in beneficiary form showing both his name as beneficiary and yours as the original owner. He then will have the flexibility to change Roth custodians by direct transfer only and to change investments as he wishes. His options may be limited if he inherits an annuity. You are correct, that when a Roth is inherited under the Secure Act 10 year rule, it is generally best to not take any distributions until the very end of that period since all gains will be tax free. 
  • NOTE: Any annuity product that offers surrender with no loss regardless of market performance will have very limited growth potential because the insurance company must purchase downside protection from reinsurers, and this is not cheap following the 2008 financial crisis.

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