Inherited ROTH

Submitted by Brittany Koch on Fri, 2017-04-21 14:24

If my spouse passed away and I transfer his ROTH IRA into my own new ROTH. Does a new 5 year window start. If I then pass away 1 year later how are my Beneficiaries treated and what options do they have?



Submitted by Alan - IRA critic on Fri, 2017-04-21 18:47

  • This is a confusing topic because you can either continue as beneficiary, or assume ownership and roll into your own Roth IRA. The best decision depends on your age, the age of the Roth, and how much money you need from it before you reach 59.5.
  • If you  assume ownership of the inherited Roth, you are treated as if you were the owner from Day 1. The 5 year holding period starts in the year your spouse first contributed, but then you must also be 59.5 before your distributions are qualified. If you already had your own Roth IRA, you could combine the Roths and the 5 year holding period is treated as starting with the first contribution either one of you made.
  • If you then pass, your beneficiaries continue to treat the holding period as starting the same time your holding period started. But they do not have to wait until 59.5 as that non spouse inherited Roth would be fully qualified after 5 years starting with your holding period. However, your non spouse beneficiaries will have annual RMDs and if they create separate inherited Roth IRA accounts before the end of the year following the year of your death, they can each use their own age to calculate the RMDs.

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