ROTH Conversion – Non.Person – Estate as Owner of IRA

Submitted by William Steih on Thu, 2019-01-10 16:09

Does anyone have insight and experience on whether an IRA can be converted to ROTH IRA when there was NO beneficiary noted @ Custodian and the original owner’s death has caused for that IRA to become an asset of Decedent’s Estate?

The beneficiary of the Estate is interested in executing a ROTH conversion utilizing other assets of the estate to satisfy the income tax incurred.

Thank you –

WS



Submitted by Alan - IRA critic on Thu, 2019-01-10 16:38

  • The only way for a conversion would be if the beneficiary of the estate is the surviving spouse. In that case, if the executor assigns the IRA to the spouse before a distribution is made, the spouse could convert to a Roth. The estate itself cannot convert. If the beneficiaries of the estate are non spouses, then the IRA can still be assigned but an inherited IRA can never be converted.  A surviving spouse could convert because they unique in being allowed to roll over the IRA to their own account, which makes them eligible for conversion.
  • Assuming no spouse involved, assignment of the IRA to the estate beneficiaries can be done before a distribution is made to the estate, and then the beneficiary would pay taxes on distributions.  Or if it is too late and the distribution from the IRA has been made to the estate making the entire balance taxable, the income can still be passed through the estate to the estate beneficiaries on a K 1 and the beneficiaries would then report the income and pay the taxes.

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