Non-Spousal Roth Beneficiary Payout Plan
The recent Secure legislation requires that non-spousal beneficiaries withdraw IRA balances within 10 years. It appears that there is no fixed formula for this. My wife and I are in our late 70’s and our two sons are the eventual beneficiaries of our Roth accounts. Will the withdrawal rules be flexible? For example could each child decide his own formula such as withdraw all monies in the first year, all in the 10th. year or varied amounts in varied years?
Permalink Submitted by Alan - IRA critic on Sat, 2021-02-20 19:29
Yes, each child will have total control over how much they withdraw each year of the 10 year period. There are no annual RMDs. However, since this is an inherited Roth IRA, for which all distributions will be tax free, they will generate more tax free gains if they wait until the last year and take a lump sum distribution then.