Inherited IRA Post Secure Act
I am the executor and sole beneficiary of an estate inherited IRA processed in 2021. The IRA went to the estate, no beneficiary listed, distributions must me taken in 12 years based on a parents life expectancy.
Question, is there a way to back door a Roth IRA for any of the distributions received?
Permalink Submitted by Alan - IRA critic on Wed, 2021-10-06 21:12
No. A back door Roth is completed by a conversion, and a non spouse beneficiary cannot either roll over or convert an inherited IRA. However, if you are not maxing out your own workplace retirement plans, you could use the annual RMD to subsidize an increase of your pre tax contributions (eg to a 401k) and these additional pre tax contributions could offset the taxes due on the RMD.
As executor, I assume you were able to assign the inherited IRA out of the estate as an inherited IRA with yourself as beneficiary. That would allow you to close the estate.
Note that either the estate or youself is responsible for completing the 2021 RMD of the parent, if they did not complete it. Your beneficiary RMDs start in 2022 and there will be new RMD tables going into effect then. You will have to go into the new table, get the divisor for parent’s age in 2021, then subtract 1.0 for the 2022 divisor and continue to subtract 1.0 from the divisor for each subsequent year.