Non-Spouse Benficary IRA (Traditional), and Non-Spouse Roth
In Dec 2007, both a Non-Spouse Traditional IRA and a Non-Spouse ROTH IRA were inherited. The deceased was younger than age 59-1/2. Also the beneficiaries are younger than 59-1/2 yrs of age. Using the 5-year rule for both IRA and ROTH distributions, is Dec 31, 2012 the end year, or does the “bye-year” in 2008 push the 5th year for final distribution to Dec 31, 2013 for both the IRA and Roth (in 2008 or 2009 no distributions for IRA’s were required I think?)?
Permalink Submitted by Alan Spross on Mon, 2012-05-21 20:41
2009 was the year RMDs were waived and part of that waiver included not counting 2009 for purposes of the 5 year rule. Therefore, in this case the 5 year period ends 12/31/2013.
It is probably still possible to restore the lifetime stretch by taking out the life expectancy RMDs for 2008, 2010 and 2011 ASAP. PLR 2008-11028 allowed this treatment, although beneficiary had to pay the 50% excise tax for each year that was late. But in addition to that, there is nothing lost in requesting a waiver of the excise tax by filing Form 5329 for each year and explaining the “reasonable cause” for failing to take the RMDs and state that the corrective distributions have been taken.
Here is article by Ed explaining the 2008 PLR:
http://www.financial-planning.com/fp_issues/2008_7/saving-stretch-613061…