Distributions from an Inherited Roth
A designated beneficiary (not a spouse) inherits a Roth. I understand that that beneficiary has the option of totally withdrawing the Roth within a 5-year period ending not later than the end of the fifth calendar year after the year of the original owner’s death; or over the life or life expectancy of the designated beneficiary with those distributions starting before the end of the calendar year following the year of death. (page 68. 2009 Pub. 590).
If this designated beneficiary dies before the entire distribution of the Roth but has set up properly designated beneficiaries of his (her) own, what are the requirements for distribution of this subsequently inherited Roth?
Thank you for your assistance.
connie28
Permalink Submitted by mk foss on Thu, 2010-02-11 20:51
When the initial nonspouse beneficiary of a Roth IRA passes away, his/her heir will take the remaining payments due to the decease beneficiary. If the beneficiary was using the 5 year rule, the balance of the account must be taken out by 12/31 of the year that contains the 5th anniversary of the original owner’s death.
If the beneficiary was using life expectancy, the remaining payments based on that person’s life expectancy will go to his/her heir.
Often the custodians will ask a beneficiary to name someone to receive payments should they predecease. If not you follow the rules for situations with no beneficiaries.