rollover of inherited profit sharing plan to roth ira
I have a client who inherited a profit sharing account from her father many years ago. The plan has continued in existence and she has been receiving the required RMD’s each year. She wants to terminate the plan and roll the money into an IRA. I am wondering if she can do a Roth IRA rollover instead. Thanks.
Permalink Submitted by Alan Spross on Wed, 2010-11-03 23:21
Yes, she can do a DIRECT TRANSFER to an inherited Roth IRA after taking the current year RMD. Since the Roth must continue to be treated as an inherited account, RMDs must continue using the same schedule she has been on, assuming that this is the correct schedule. Note that the income from this conversion can be deferred to 2011 and 2012 like any other Roth conversion done in 2010.
Remember to check to see if there is any after tax basis in the plan, and/or highly appreciated employer stock shares to which NUA could be applied.
Permalink Submitted by Richard Feld on Thu, 2010-11-04 13:26
thanks for the quick reply. there is no basis or nua in the plan. appreciate the help.