Non-spouse Roth beneficiary
If a non-spouse inherits a Roth IRA and the Roth has been in existence for 5 years of greater, is there any age requirement for “earnings” to be withdrawn tax-free. if beneficiary is less than age 59.5 , i assume contributions, conversions can be withdrawn tax free. but would the earnings also be able to be withdrawn tax-free?
thank you
Permalink Submitted by Alan - IRA critic on Thu, 2022-01-06 20:10
Yes, because an inherited Roth that has been open at least 5 years becomes qualified by the death of the owner. Therefore all distributions the beneficiary takes will be tax free and Form 8606 is not required to report them. They go only on line 4a of Form 1040. The non spouse beneficiary just needs to be sure the Roth has met the 5 year requirement.
Until the Roth has been held 5 years (combining owners and beneficiaries time), the Roth ordering rules apply and the earnings come out last, but the beneficiary will need to determine what the Roth IRA basis is in order to report the distribution on Form 8606.