ROTH IRA rollovers to non-spouse beneficiaries

Client converts Trad IRA to a ROTH IRA in 2005. Dies in 2007. Can the 2 non-spouse beneficiaries roll over to BDA-ROTH IRA’s or is there a waiting period after the conversion. Does the death of the original ROTH IRA owner trump the holding period requirement?



There cannot be a rollover, if the accounts are moved to another custodian, it must be a trustee to trustee transfer. If the conversion is the first Roth established by the deceased, then the 5 year holding period must still be satisfied for earnings to be tax free. If the beneficiaries take only their RMD’s, which must begin in 2008, it is not likely that any earnings would be withdrawn. Of course there would be no penalty due to death if the 5 year holding for penalty on conversion applied to the IRA owner.

Ed C



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