Inherited Roth IRA without a beneficiary
Thank you in advance for your help! We have a client who inherited a Roth IRA from her brother. The original Roth IRA did not have a beneficiary designation listed. The sister is named the sole beneficiary in his will. She is getting conflicting information on when she needs to take a distribution from the account. Can the distribution be over her life expectancy or does it need to be within five years after the date of death? She was also told she needed to take a full distribution within one year of the date of death.
Permalink Submitted by Alan - IRA critic on Thu, 2017-10-05 23:06
No matter what age the brother passed, with a Roth IRA he is deemed to have passed prior to his required beginning date. For an estate beneficiary the 5 year rule will apply. Under the 5 year rule, the only requirement is that the inherited Roth must be fully distributed no later than the end of the 5th year following the year of brother’s death. DIstribution within 1 year is not a requirement unless the IRA agreement states this requirement. The executor of the estate should be able to assign the inherited Roth to the sister since the executor is not going to want to keep the estate open any longer than necessary. But even with assignment to the sister, the 5 year rule still applies to her.
Permalink Submitted by Diane Pearson on Sat, 2017-10-07 15:32
Thank you for confirming what I thought to be true.