inherited Roth and RMD
Is a beneficiary who is one year older than the deceased required to take RMDs from a ROTH during years one through 10? The deceased passed in 2021 and was 80 years old.
The beneficiary is a sibling who is an eligible designated beneficiary because she is not more than 10 years younger than the deceased. The beneficiary is under the impression that she may wait until year ten and then empty out the account.
Permalink Submitted by Alan - IRA critic on Thu, 2023-12-21 15:57
EDBs must take annual RMDs but are not subject to the 10 year rule. However, due to her age the inherited Roth will only last about 10 years anyway. Note that she could have opted out of EDB treatment before the end of 2022 and into the 10 year rule and while the inherited Roth would still have to be drained in about 10 years, there would have been no annual RMDs required before the total distribution in 2031. She missed the deadline to do that.
Permalink Submitted by rosalyn malin on Thu, 2023-12-21 17:00
How does one opt out of EDB? She did not take a RMD in 2022. she was under the impression that that by not taking the RMD, she was indicating that she preferred to wait until the 10th year. However, she heard that the IRS had proposed that RMDs be taken in years 1 through 9 and was wondering if “proposed” laws would affect her this year.
Permalink Submitted by Alan - IRA critic on Thu, 2023-12-21 18:48
An EDB must always take annual RMDs unless they opt out. The IRS proposed Regs for non EDBs (10 year rule) will require annual RMDs only if the account owner passed post RBD, so does not apply to any Roth beneficiaries. Neither the IRS or most likely IRA custodians have defined the opt out parameters, and being in a state of limbo on the opt out procedure or deadlines, I think she would be OK by notifying the IRA custodian that she has opted out of EDB treatment and did not take a 2022 EDB required RMD. She should then be able to avoid any further annual RMDs until the total distribution year of 2031. The inherited Roth could then continue to generate tax free gains.