Beneficiary Roth IRA
I’ve come across a 32 year old person who inherited her mother’s Roth IRA in 2010 when Mom died at the age of 65. This person hasn’t taken any distributions from the account since inheriting it. Her tax preparer told her she doesn’t need to take distributions because it’s a Roth. I just want to confirm that she is or isn’t required to take distributions from the account. If she does need to take distributions what is the process to do so and would she be subject to any penalties? If she is subject to a penalty is there a way for her to avoid it since she went on the advice of her tax preparer? Thanks in advance for your help.
Permalink Submitted by Alan - IRA critic on Wed, 2021-12-22 17:16
She has had to take beneficiary RMDs since she does not own the Roth. She has triggered the 5 year rule now and should distribute the entire balance, and file Form 5329 for 2015 onward to request the penalty waiver. Her tax preparer did her no favors here. While the IRS will likely waive the multi year penalties if the 5329 forms are completed correctly, she is losing her inherited Roth prematurely, and can blame the preparer for that.