Roth IRA Distribution after Death
My wife and I each have a Roth IRA. Our son is the sole beneficiary in both account. I am interested to know the following estate event questions:
Upon death, will the beneficiary of the account, my son, have to make RMD? or will he be able to continue to keep the balance of the account in a Inherited Roth account?
Will the RMD be taxable to him?
Thank you in advance for your help.
Best regards,
Greg
Permalink Submitted by Edward Czapor on Wed, 2010-03-17 21:31
Your son will be subject to RMD’s as with any inherited IRA based on his age. The distributions would be tax free unless earnings, which come out last, were withdrawn before the IRA was established for at least 5 years. This 5 yr period includes you or your wife’s holding period plus his. If both of your Roth IRA’s have existed for at least 5 yrs. then this is not a concern. And if not, if only RMD’s were withdrawn then any taxation is unlikely. He could of course withdraw any amount desired, and if the combined holding is at least 5 yrs., all withdrawals are tax free. There is no penalty even in the unlikely case of earnings withdrawn.