Permalink Submitted by Burt Moss on Fri, 2010-10-15 14:57
The beneficiary is the deceased’s son. I believe that he cant convert to a Roth but wanted someone elses opinion or the reference to the authority on this.
Permalink Submitted by tomd37 on Fri, 2010-10-15 16:58
Burtmoss,
That is correct. A traditional IRA inherited from a non-spouse cannot be converted to a Roth IRA. Also, it must be kept separate from any other traditional IRA the beneficiary might own and the beneficiary cannot add funds to the inherited IRA. The beneficiary must take required minimum distributions (RMDs) from the inherited IRA by December 31st of the year following the death of the original owner. The factor for determining the amount of the RMD will be found in Table I of IRS Publication 590 available online at http://www.irs.gov under forms and publications. The factor is based on the attained age of the beneficiary as of December 31st of the year following the death of the original owner. That factor is decreased each succeeding year by 1.0 to determine the RMD. The RMD is calculated based on the value of the IRA as of December 31 of the preceeding year. If the beneficiary keeps the stretch capability of the inherited IRA, he/she must calculate and take the RMD separate from any other traditional IRA owned. Of course, the beneficiary can take out more than the RMD from the inherited IRA.
All specific details can be found in IRS Pub 590. I suggest anyone who has an IRA should get a free personal copy by ordering it off the IRS website.
Permalink Submitted by tomd37 on Fri, 2010-10-15 14:49
What is the relationship of the beneficiary to the original owner? The answer to this question will impact responses.
Permalink Submitted by Burt Moss on Fri, 2010-10-15 14:57
The beneficiary is the deceased’s son. I believe that he cant convert to a Roth but wanted someone elses opinion or the reference to the authority on this.
Permalink Submitted by tomd37 on Fri, 2010-10-15 16:58
Burtmoss,
That is correct. A traditional IRA inherited from a non-spouse cannot be converted to a Roth IRA. Also, it must be kept separate from any other traditional IRA the beneficiary might own and the beneficiary cannot add funds to the inherited IRA. The beneficiary must take required minimum distributions (RMDs) from the inherited IRA by December 31st of the year following the death of the original owner. The factor for determining the amount of the RMD will be found in Table I of IRS Publication 590 available online at http://www.irs.gov under forms and publications. The factor is based on the attained age of the beneficiary as of December 31st of the year following the death of the original owner. That factor is decreased each succeeding year by 1.0 to determine the RMD. The RMD is calculated based on the value of the IRA as of December 31 of the preceeding year. If the beneficiary keeps the stretch capability of the inherited IRA, he/she must calculate and take the RMD separate from any other traditional IRA owned. Of course, the beneficiary can take out more than the RMD from the inherited IRA.
All specific details can be found in IRS Pub 590. I suggest anyone who has an IRA should get a free personal copy by ordering it off the IRS website.
Permalink Submitted by Burt Moss on Fri, 2010-10-15 19:01
Thank you very much for the thorough response.