Inherited ROTH IRAs
I understand all Roth IRA contributions are nondeductible, so if clients have inherited a ROTH IRA, all of the contributions are basis and can be withdrawn tax-free. I also understand the earnings can be also be withdrawn tax-free, as long as any ROTH IRA was held for more than five years (including the time the deceased account owner held the ROTH IRA).
I would like to confirm that for inherited ROTH IRAs neither the beneficiary nor the deceased needs to have obtained the age 59 1/2. Is that correct?
Permalink Submitted by Alan - IRA critic on Tue, 2013-12-03 18:04
That is correct. Effectively, death replaces the age 59.5 requirement. A Roth therefore becomes qualified when the 5 year holding period is met and the owner passes or becomes disabled. The ordering rules also no longer apply once the Roth is qualified for either owner or beneficiary.