Roth Beneficiary

Submitted by Jack Abriola on Tue, 2016-03-01 18:48

I have a client that has inherited a Roth from his mother. His mother inherited it from her husband. Between the mother and the father, the 5 year period has long passed. Now the son who inherited the Roth has taken a full distribution of the balance and he is younger than 591/2. Is he exempt from taxation on the balance and exempt from the 10% penalty since the 5 year period passed from the original contribution?



Submitted by Alan - IRA critic on Tue, 2016-03-01 19:47

  • All distributions from an inherited IRA are exempt from the 10% penalty. Further, because this Roth has been opened for more than 5 years in total, it is fully qualified and therefore the entire distribution is tax free.
  • There might have been some prior RMD violations however. It depends on whether mother rolled it over to her own Roth IRA or took RMDs as the beneficiary, and how long since mother passed.

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