Inherited Roth IRA Distributions
The taxpayer inherited a substantial Roth IRA. She was under the impression that she didn’t need to take distributions until
she was 701/2. In year 4 after the DOD, she realized the error and took a distribution equal to the required amount for the first 4 years. She wants to continue to take the distributions over her lifetime. Is that possible or is she forced to take the balance in the 5th year? If she is required to take the balance and does not, what is the penalty?
Permalink Submitted by Alan - IRA critic on Tue, 2019-11-05 02:07
This answer addresses only non spouse beneficiaries. The default RMD rule for most IRA agreements is life expectancy. The IRS rules in PLR 2008 11028 that the beneficiary could restore the stretch if they missed LE RMDs. However, in that PLR the applicant had to pay the 50% penalty for the late RMDs. More recently, many beneficiaries have appealed the penalty by filing Form 5329 after making up the late RMDs and explaining the reasonable cause for being late. The IRS generally approves the waiver request. Therefore, I would recommend that she check the IRA agreement to make sure that LE is the default method for deaths prior to the RBD (all Roth owners pass prior to the RBD because there is no RBD for a Roth). If so, she should continue these LE RMDs into the future and file a 5329 for each late year requesting the penalty waiver, starting with the year following the year of the owner’s death.