Death of ROTH IRA owner
owner of Roth ira died in 2013. The Beneficiary of the Roth has not done anything at this point in time. is it too late for beneficiary to set up inherited ira with roth account and stretch distributions over her lifetime?
owner of Roth ira died in 2013. The Beneficiary of the Roth has not done anything at this point in time. is it too late for beneficiary to set up inherited ira with roth account and stretch distributions over her lifetime?
Permalink Submitted by Alan - IRA critic on Mon, 2015-08-24 21:52
No, not too late. Assuming a non spouse beneficiary, they should calculate and distribute the 2014 RMD and send in a 1040X with Form 5329 completed according to the last page of the 5329 instructions. A waiver of the 50% penalty should be requested for reasonable cause perhaps being that they did not realize that an inherited Roth had RMD requirements. The IRS will probably grant the waiver by not replying. Of course the 2015 and later RMDs should be taken by the end of each respective year. There should be no taxable income, but an 8606 must still be filed until 5 years passes from the year of the first Roth contribution by the decedent. Beneficiary should determine that the decedent started the Roth before 2011 and if so the Roth is qualified now and no 8606 will be needed to report distributions.