Recharacterize Inherited Roth IRA on non-spouse inherited 401k?
I inherited a 401k last year as a named non-spousal beneficiary. I opted to transfer some into an inherited Roth IRA based off my expected income for the year. It turns out my estimation was off due to unknown income related to some aspects of the estate.
Is it possible to recharacterize the Inherited Roth portion back into the Inherited IRA?
The Roth conversion happened as required during the trustee to trustee transfer from an inherited 401K plan. I wasn’t sure if this possibly took away the recharacterization option since it happened during the transfer to a new trustee.
Permalink Submitted by Alan - IRA critic on Thu, 2017-03-09 17:54
Yes, the direct rollover to an inherited Roth can be recharacterized to an inherited TIRA per Notice 2008-30, Q 7. However, requests to do this are very rare and you may need the reference to convince the Roth custodian to process the recharacterization. You can take out the 2017 RMD either before or after the recharacterization depending on how you want that RMD to be taxed.