RMD

Submitted by Bob Foland on Wed, 2022-11-16 18:30

David died at age 80 in 2020. He had funded a Roth IRA the year before.
David’s stepson, Bob, inherited the IRA:

1 Does he fall under the old rules or the SECURE Act?
2 David was past RBD age, although there was no RBD for his Roth. If Bob falls under the SECURE Act, when is his RBD?
3 The Roth has not yet been in existence for five years. How does that affect Bob’s withdrawals?



Submitted by Alan - IRA critic on Wed, 2022-11-16 19:07

  1. Secure Act.
  2. All Roth owners pass prior to RBD. Bob is subject to the 10 year rule but with no annual RMDs. The inherited Roth must be drained by 12/31/2030.
  3. If Bob waits until 2024, the inherited Roth will be qualified and distributions will be tax free without having to report on Form 8606. Form 8606 would require entering the Roth basis, either regular or conversion. Any distributions prior to 2024 would be tax free up to the amount of Roth basis contributed by David, but any additional distributions would be taxable non qualified earnings. In other words, the 5 years required for the entire inherited Roth to be qualified starts with the first year David contributed to any Roth (2019?) and continues to run after his death. Therefore, the 5 year holding is complete at the end of 2023.

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