Inherited Roth IRA
Parent inherits Roth IRA from deceased son, does penalty apply if the Roth was funded within 5 years of parent inheriting and liquidating it?
Parent inherits Roth IRA from deceased son, does penalty apply if the Roth was funded within 5 years of parent inheriting and liquidating it?
Permalink Submitted by Alan - IRA critic on Thu, 2017-01-26 21:59
There is no penalty on inherited accounts of any kind, however if 5 years has not passed (starting 1/1 of the first contribution year) any earnings in the Roth IRA will be taxable as reported on Form 8606. The parent will have to determine how much the son contributed to the Roth IRA to know what the basis of regular contributions or conversions was. If the Roth was at the same custodian from the beginning, they might be able to provide this information, but they will not show the taxable amount on Form 1099R because they have no way of knowing if there were any other Roth IRAs the son might have had elsewhere.