Inheritance
I inherited a traditional IRA and a Roth IRA from my brother. We saw our accountant who thought that I would have to start drawing down on the traditional IRA either in one lump sum or over the next 5 years. He was not sure of the rules of a non-spousal inheritance of a Roth IRA. Can I hold off taking distribution? I am 60 years old and plan to retire in 15 months when I am 62. My accountant attended one of your conferences and said to ask you!
Permalink Submitted by Alan - IRA critic on Wed, 2013-03-06 02:18
You will have to take your first life expectancy RMD no later than 12/31 of the year following the year of your brother’s death. This applies to both the TIRA and the Roth IRA. I assume you were named as beneficiary and did not inherit through his estate, and if so almost all IRA agreements allow life expectancy RMDs. The inherited Roth distributions should be tax free even if 5 years has not passed since your brother first contributed. If more than 5 years, the entire Roth is tax free and you would not have to determine the breakdown of his regular or conversion contributions in order to report Roth distributions on FOrm 8606. After 5 years, the 8606 is not needed. Please advise if any of this needs further clarification.