inherited Roth
Mary’s husband, Ed died and she inherited his Roth several years ago before tax law changes and was taking RMD’s based on her LE. She then remarried Bill and made him the beneficiary on this a/c. Mary recently died and left the inherited Roth to Bill. What are the rules for distribution for Bill at this point? Thank you.
Permalink Submitted by Alan - IRA critic on Mon, 2024-02-26 18:57
Mary should have elected to assume ownership of the inherited Roth IRA, as that would have eliminate beneficiary RMDs. While she did not do so, if she failed to complete the beneficiary RMD in any such year, she would have defaulted to owning the IRA, which means that Bill would have been a designated beneficiary rather than a successor beneficiary, and then Bill could assume ownership.
But if Mary never attained ownership by default, instead electing to continue to be treated as the beneficiary, upon her death Bill becomes a successor beneficiary and is subject to the 10 year rule. He is not an EDB as a spouse because an EDB must be a designated beneficiary, not a successor beneficiary. As such he will not be subject to annual RMDs, but will have to drain the inherited Roth in year 10.