RMD for non-spouse beneficiary of a Roth Conversions
Client, widowed, age 95 has existing Roth IRA which was opened and funded via an IRA conversion in 2010.
Client now wants to do an additional Roth conversion in 2020 to pass more tax free income to son.
If client dies prior to the new 5 year conversion period (say in 2023?) what are the tax consequences to the son?
Not sure if this matters but current Roth IRA = $52,000 – son is age 45 and amount being contemplated to convert in 2020 would probably be approx. an additional $50,000.
Thanks as always for your help
Howard
Permalink Submitted by David Mertz on Mon, 2020-11-30 01:35
The 5-year holding period for conversions only applies to a participant who has not yet reached age 59½. The 5-year holding period for conversions does not apply to the participant after reaching age 59½ and never applies to distributions from an inherited IRA regardless of the age of the participant or beneficiary. Since the client is age 95 and it has been more than 5 years since the beginning of the year for which the client first made a Roth IRA contribution, in this case a Roth conversion in 2010, any distributions from the client’s Roth IRAs to either the client or the client’s beneficiaries are tax and penalty free.