Roth Beneficiary RMD – Spouse as Bene

Submitted by Dennis Prout on Mon, 2014-04-28 19:35

-A client’s spouse passed away before reaching age 70-1/2. The surviving spouse elected to be treated as a beneficiary on his deceased spouse’s Roth IRA at the time of passing. Is the surviving spouse required to take RMDs immediately, or can he wait until the year in which his deceased spouse would have turned age 70-1/2? Pub 590 talks about spousal beneficiaries of IRA owners who pass away before their required beginning date, but a Roth wouldn’t have a required beginning date.

Thanks!



Submitted by Alan - IRA critic on Mon, 2014-04-28 23:35

While deceased owners of Roth IRAs are deemed to have passed PRIOR to the RBD (because there isn’t one), it is seldom beneficial for the spouse to maintain the Roth as inherited. In most cases the surviving spouse should roll the Roth over to their OWN Roth IRA, which will eliminate RMDs entirely. The surviving spouse is then treated as if they owned the Roth IRA all along. The Roth will be qualified if the deceased spouse first contributed at least 5 years ago or the surviving spouse has their own Roth IRA which is already qualified. Why does client want to treat this Roth as inherited?

Submitted by Dennis Prout on Wed, 2014-04-30 15:43

The previous adivsor had them treat the Roth as an inherited Roth instead of a spousal roth, and is now telling them that they need to take RMDs from the Bene Roth.  However, the deceased spouse would not have turned 70-1/2 for another 8 years.  We’re going to get the account registration changed to a spousal Roth, but wanted to know if the surviving spouse really does need to take RMDs if it were to remain registered as an inherited Roth.  In other words, do the same rules that apply to spouses of traditional IRA owners who passed away before 70-1/2 also apply to spouses of Roth owners who passed away before 70-1/2?

Submitted by Alan - IRA critic on Wed, 2014-04-30 17:16

As long as the IRA agreement does not automatically make a sole spouse beneficiary the owner (some agreements do that), the survivor has the option to maintain the Roth as inherited. As for traditional IRAs, RMDs would not start until the year the decedent would have reached 70.5, another 8 years from now, and the other rule that applies is that if the survivor fails to take an RMD as beneficiary, they are deemed to have assumed ownership of the Roth. If the decedent made the first Roth contribution at least 5 years ago, the Roth is qualified and there is no situation that benefits the survivor if the inherited status is maintained. The only scenario under which beneficiary status would be advisable would be for non qualified Roths with recent conversions and/or earnings where the beneficiary needed to withdraw conversions under 5 years and/or the earnings before 59.5. In that situation the inherited status would eliminate the 10% penalty on the conversions and the earnings.

Submitted by mk foss on Wed, 2014-04-30 17:18

There is no RBD for a Roth so the provision that allows a surviving spouse to defer RMDs until the death of the original owner is applicable.  The life expectancy and 5-year rule provisions would also be available. But I’ve never seen anyone treat the spuse of a Roth owner as a nonspouse beneficiary. 

Submitted by mk foss on Wed, 2014-04-30 17:19

There is no RBD for a Roth so the provision that allows a surviving spouse to defer RMDs until the death of the original owner is applicable.  The life expectancy and 5-year rule provisions would also be available. But I’ve never seen anyone treat the spuse of a Roth owner as a nonspouse beneficiary. 

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