Inherited Roth IRA’S RMD Requirements
Can you please advise if my thinking is correct? I am working with a Mom and Dad that inherited an IRA from their daughter, The daughter was 40 when she died on 9/22/21. The IRA was made up of some traditional IRA funds and some Roth funds. We are rolling the 401K to indexed annuities, on traditional and one Roth for each of the parents. My understanding is that on the Traditional IRA they need to take annual RMD’S starting no later than December 2022 however, on the Roth funds they are not required to take RMD’s. Is that correct ?
Permalink Submitted by David Mertz on Mon, 2021-11-29 16:34
The Roth IRAs have the same RMD requirement as do the traditional IRAs. Because the parents are eligible designated beneficiaries and the participant died before her required beginning date for RMDs, the parents must either take annual distributions based on their individual life expectancies or must use the 10-year rule which requires the IRA to be fully drained by the end of 2031. The choice of LE of the 10-year rule can be made separately for each inherited traditional and Roth IRA.
Permalink Submitted by Cody Wilbert on Mon, 2021-11-29 18:01
Thank you for your input.
Permalink Submitted by Alan - IRA critic on Mon, 2021-11-29 17:18
If they inherited a 401k with pre tax and Roth balances, the rules are basically the same as DMx indicated, although they have the option to do a direct rollover from the inherited pre tax 401k to an inherited Roth IRA if they wish. If daughter named both parents as beneficiaries, there will be 4 direct rollovers to do, 2 for each parent.
Permalink Submitted by Cody Wilbert on Mon, 2021-11-29 18:03
Thank you, I appreciate your input.