RMD rules Bene Roth IRA from Spouse

Submitted by Jon Steffen on Fri, 2021-02-12 17:17

Jane Doe DOB: 7/20/1963, passed away 11/30/2020, had a Roth IRA valued at $50,000.

John Doe (husband of Jane) wants to open a spousal beneficiary Roth IRA to receive Jane’s assets. He started his first Roth IRA 1 year ago.

Does he have to take an RMD on the spousal bene roth ira, and if so, when?

Does he have to pull all the money out of the spousal bene roth ira within 10 years?

If John Doe wishes to assume the spousal beneficiary Roth IRA as his own, does the $50,000 become basis that he could spend prior to his first and only Roth IRA hitting the 5 year clock? If it does not become basis, what does it become?



Submitted by Alan - IRA critic on Fri, 2021-02-12 18:23

If he maintains the Roth as an inherited Roth, his RMDs do not start until the year Jane would have reached 72. How long he should maintain the Roth as inherited depends on his age. What is his DOB, and what year did Jane first make a Roth contribution?

Submitted by Jon Steffen on Fri, 2021-02-12 19:52

His DOB is 9/13/1961, he’ll be 59.5 next month. Also I forgot to say this is a Roth 403b, not Roth IRA that he’s inheriting.  HIs spouse has been contributing to this Roth 403b for over 6 years. 

Submitted by Jon Steffen on Fri, 2021-02-12 19:54

So even though Roth accounts don’t normally require RMD’s, if a spouse is the beneficiary of a Roth, they do have to take RMDs when the deceadant would have turned 72?

Submitted by Alan - IRA critic on Fri, 2021-02-12 20:30

He should request a direct rollover of the inherited Roth 403b account to his own Roth IRA. Because the Roth 403b became qualified upon his wife’s death, when directly rolled into his own Roth IRA, the entire amount of the rollover will be treated as regular Roth IRA contribution basis. As such it can be withdrawn anytime without tax or penalty. While his Roth IRA will not be qualified for 4 more years, it is only the earnings in his Roth IRA including earnings generated on the amount rolled over from the 403b that will not be tax free until the 5 year holding period is completed. There will be no RMDs due since he owns the Roth IRA and will no longer be treated as a beneficiary. The “spousal rollover” in this case has no downsides.

Submitted by Jon Steffen on Sat, 2021-02-13 03:35

And what if the account was only opened for 4 years by his spouse, prior to her passing?

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