RMD from spousal inherited Roth IRA?
This took place before the 10 years distribution rules, but since it was between spouses, I don’t think that matters. The custodian is showing a required distribution amount, however the Roth IRA was inherited by husband when his wife passed away.
At the time of passing, his wife was over RMD age, but of course wasn’t required to take an RMD from a Roth IRA. At the time of passing the client / custodian set the Roth up as an inherited Roth IRA (rather than just rolling the Roth IRA into the husbands Roth IRA).
It seems like they are treating him as just an inherited Roth IRA non spousal beneficiary (thus calculating and telling him to take an RMD) vs. a spousal beneficiary.
The husband has NOT been taking RMD’s from his wife’s Roth IRA for several years at this point. He has not received any notification from the IRS, however the custodian continues to insist that he has an RMD.
So, must he take past and present RMD’s from his deceased spouses Roth IRA or can he simply transfer the Roth into his own Roth account at this point and make the RMD reminders from the custodian stop?
or is it not that simple?
Permalink Submitted by Alan - IRA critic on Mon, 2022-03-07 22:18
First, husband was not required to take an annual RMD until the year his wife would have reached 70.5. Once that year arrived if the full beneficiary RMD was not distributed, husband defaulted to ownership status of the inherited Roth. Therefore, he never actually needed to take a beneficiary RMD and never incurred any penalty. But now he should have it retitled with him as owner to reflect those default rules.
Since he apparently also has his own Roth IRA, upon defaulting to ownership of his wife’s, his holding period is the longer of the two spouses, so he probably has held the longest at least 5 years by now and is likely over 59.5. As such his Roth IRAs are now fully qualified and tax free, and there is no reason they cannot be combined into a single account.
Sometimes there is a valid reason for maintaining a spousal inherited Roth as such, but not after 5 years and age 59.5. The Roth custodian does not understand the default ownership rules, which work the same for both traditional and Roth IRAs.