Inheriting employer plan with after-tax contributions
I understand that after-tax contributions in an employer plan can be rolled over into a Roth IRA. Does the same apply if you inherit an employer plan in which the deceased person made after-tax contributions? Can the money be split into an inherited IRA and an inherited Roth IRA?
Permalink Submitted by Alan - IRA critic on Mon, 2019-09-23 16:15
Yes, request a direct rollover of the pre tax amount to your inherited TIRA, and the after tax amount to your inherited Roth IRA. You will have to open these two inherited IRAs to receive the direct rollovers. Be sure NOT to roll any of these amounts to an IRA you own. This is a split rollover per Notice 2014-54. You will then have to update for your own records the amount of basis you have in the inherited Roth IRA so you can report the RMDs on Form 8606 you take from the inherited Roth. The inherited Roth will not be qualified for 5 years. Both the inherited TIRA and inherited Roth will be subject to annual inherited IRA RMDs.