My mother died in June 2004 at age 77 (would have been 78 that year), and I was 42. I inherited her 403(b). She was taking RMD from the account. As a non-spousal beneficiary, I did not want to take the money in a lumpsum, or over 5 years, as it was all taxable to me. I have been taking the RMD each year based on my life expectancy – I don’t need this money right now.

In May 2007 I transferred the account to a beneficiary designated IRA at another carrier. I took RMD in 2007 and will do so in 2008. My question is two-fold: 1) Am I allowed to now transfer the current beneficiary designated IRA into a ROTH IRA, and 2) does it make sense financially to do so. I currently own a ROTH. My mother did not. (I also inherited a small IRA from her and take RMD from that as well, but it’s not large).

IF I was allowed to transfer to a ROTH, would I have to do it in one year, or could I spread the taxable income over several years? Would I still be required to take RMD each year, or could I wait until I was 59 1/2, or 80, or whatever I choose? If I’m allowed to do this, I’m trying to calculate which way is more advantageous.

Your help is greatly appreciated.