Inherited IRA – pending retirment
Hi – I inherited a portion of my mom’s IRA in 2020. Have not taken an RMD yet, though understand I should do so in 2023. I am going to retire June 30, 2024 and after that point, will not have any earned income – so my “window” to make contributions to my Roth end then. I have been doing Mega Roth contributions from my 401k plan as I had accumulated a significant post tax balance (and earnings thereon). I did this in 2022 and 2023, and will do again in 2024 recognizing I will pay the taxes.
Is there anyway to get that inherited IRA moved into my Roth? Or am I stuck doing back door $7,500 in 2023 and 2024? I suppose if there is no way to get it over, I can do the minimum RMDs, pay the taxes and put the money in my taxable portfolio.
Any thoughts?
Permalink Submitted by Alan - IRA critic on Thu, 2023-05-04 01:00
Non spouse inherited IRAs cannot be converted to inherited Roth IRAs. Assuming your mother passed after her RBD you do need to take annual beneficiary RMDs starting this year. The IRS has waived the penalties for not taking those RMDs in 2021 and 2022. You must drain the inherited IRA by 2030 under the 10 year rule. After you retire and your taxable income is low, you could directly rollover your 401k pre tax balance into an IRA and then do incremental Roth conversions in the low marginal rate years. Those rates will of course by lower if you delay SS benefits.