Roth Conversion by Parent versus inherited IRA roth conversion options

Submitted by Amrish Patel on Wed, 2020-11-25 17:01

I would like to know if inherited IRA by the children can be converted to Roth to avoid SECURE ACT 10 year distribution and continue the growth in a tax-free manner?
Note: The objective is that the tax will be paid at the time of conversion. However, will get the ability to grow unwanted assets tax-free to go to the grandchildren.



Submitted by Alan - IRA critic on Wed, 2020-11-25 17:28

Under current law, a non spouse inherited IRA cannot be converted. Even if it could be converted to an inherited Roth IRA, the 10 year rule would still apply because the IRA would still be inherited and not owned. Conversely, an inherited qualified plan (eg 401k) is allowed to be transferred to an inherited Roth IRA. 

Submitted by Marvin Rauchbach on Thu, 2020-11-26 16:34

Just to confirm, if a non-spouse inherits an Ira and a Roth , they can convert the Ira to the inherited Roth ( even incrementally ) And obviously pay the tax each year they convert.  Thanks 

Submitted by Alan - IRA critic on Thu, 2020-11-26 17:06

No, an inherited non spouse IRA cannot be converted to an inherited Roth IRA. However, an inherited non spouse qualified plan (eg 401k or 403b) CAN be converted to an inherited Roth IRA. 

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