ROTH Conversion if you own a bene IRA
If a client does a non deductible IRA and then converts it to a ROTH the same day (own no other IRA’s) it would normally be tax free because there is no gain, but their parent left them a Bene IRA. On that original IRA to ROTH is there any prorated taxes due to owning the bene if we are not touching the bene?
Permalink Submitted by Alan - IRA critic on Tue, 2015-03-31 18:53
No. The inherited IRA does not affect the taxes due on the conversion whether a distribution is taken from the inherited IRA or not. In fact, an RMD must be taken from the inherited IRA every year.