RMD for benificiary of a Roth IRA?

Submitted by Linda Randazzo on Mon, 2009-01-12 14:25

Is a beneficiary of a Roth IRA subject to RMDs? I believe they are subject to the 5 year holding period if the owner did not satisfy that requirement, but was wondering about RMD.

Thanks
Wannabe IRA person



Submitted by Al Fry on Mon, 2009-01-12 14:44

Yes. Calculated the same way TIRA bene RMDs are calculated. The main difference is cost basis comes out first, so if only RMDs are taken until 5-year period is satisfied, it is unlikely anything will ever be taxed.



Submitted by Linda Randazzo on Mon, 2009-01-12 15:29

Thanks Al,

I am fairly new to IRAs. I appreciate your help. Two more questions. Is the table that is used to determine the RMD for beneficiaries different than for an owner of a TRA?

So if there was an appreciation of value of the property at the time of W/D and the Roth bene W/D an amount above the original cost they would be taxed on the portion that represented the gains, correct?

Promise no more questions (for today 😉 )



Submitted by Alan Spross on Mon, 2009-01-12 19:04

The RMD table is the same as used for a non spouse TIRA beneficiary. It is Table I, the Single Life Expectancy Table in Pub 590. A spousal beneficiary can assume ownership of the Roth and avoid any RMDs.

The 5 year period for the Roth to be qualified and fully tax free continues to run after the owner’s death. But if earnings are distributed prior to meeting the 5 year requirement, the amount of earnings would be taxed at the marginal ordinary income tax rate of the beneficiary. Distributions are reported on Form 8606.



Submitted by Linda Randazzo on Mon, 2009-01-12 22:57

Thank you!



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