Roth IRA suspended RMD
A person born in Oct 1951 is age 72 in 2023 has a Roth IRA balance of $35,000 as of
12/31/22. Roth IRA has been in effect for more than 5 years. Based on the new law and interpretations are these correct:
1. Does not have to take an RMD in 2023 but has to empty out this IRA by 2032.
2. The deferral of RMD for 2023 does not extend the 10 year period to 11 years.
3. When the RMD is taken there is no income tax on both the principal and accumulated earnings
4. Is there any way not to take these Roth IRA distributions in the future and leave the funds to the beneficiaries which
are the spouse of the IRA owner and the adult children of the married couple
Permalink Submitted by Alan - IRA critic on Mon, 2023-08-07 16:48
Roth IRA are not subject to RMDs for the owner? Has the owner passed?
Permalink Submitted by alberto vega on Tue, 2023-08-08 00:08
No the IRA owner is still alive. Therefore the Roth IRA can remain untouched and can continue toaccumulte earnings until the owner dies?
Permalink Submitted by Alan - IRA critic on Tue, 2023-08-08 00:57
Yes, it can be left alone to accumulate tax free gains. If eventually inherited by a non spouse beneficiary the 10 year rule will apply in most cases with no annual beneficiary RMDs. Some non spouse beneficiaries will be EDBs and will have to take annual RMDs but no 10 year rule. Most Roth beneficiaries will inherit qualified Roth IRAs with all distributions tax free.
Permalink Submitted by alberto vega on Tue, 2023-08-08 17:06
Sorry to continue, but I want to make sure. The spouse beneficiary of this Roth IRA does not have totake any distributions ever until that spouse dies. Then the inheritors (adult children of spouse), which will be non-spouse beneficiaries, will have to take RMD based on the 10 year rule? Which beneficiaries can take RMD based on the factor appropriate for their age?
Permalink Submitted by Alan - IRA critic on Tue, 2023-08-08 17:41
If this Roth is left to a surviving spouse, the surviving spouse can elect to assume ownership of it and as the new owner will also have no RMD requirements. That surviving spouse should name their own beneficiary and if they are the children, the 10 year rule will apply to the children (assuming they are not disabled), but those children will have no beneficairy RMD requirement in years 1-9 of the 10 years. They will just have to drain the inherited Roths by the end of year 10 and that distribution will be tax free.