Inherited IRA and Inherited Roth IRA
Owner A passed away on 07-05-2023
Owner A was born on 06-30-1953
Owner A’s brother, Beneficiary B, was primary beneficiary of Owner A’s Traditional IRA and Roth IRA
Beneficiary B was born on 03-24-1957
Questions:
- Since Beneficiary B was within 10 years of Owner A, does he need to take annual RMD’s from both the Traditional IRA and Roth IRA?
- Since Beneficiary B was within 10 years of Owner A, can he stretch the annual RMDs throughout his lifetime?
- Does both Traditional IRA and Roth IRA need to be depleted by year 2033? (10 years after Owner A’s DOD?
Permalink Submitted by Alan - IRA critic on Wed, 2025-01-15 19:13
B is an EDB and therefore must take annual RMDs from both the TIRA and Roth IRA. These are life expectancy stretch RMDs and the 10 year rule does not apply.
Permalink Submitted by George McCabe on Thu, 2025-01-16 16:22
Does the beneficiary have to choose the stretch option for the Roth IRA? Could he choose the 10-year option to avoid annual RMDs from the Roth and empty the account in the 10th year?
Permalink Submitted by Alan - IRA critic on Thu, 2025-01-16 18:21
The beneficiary would have had to opt out of EDB treatment by the end of 2024 (year after death). Most likely all IRA plans (unlike qualified plans) include life expectancy as the default method for EDBs, so it’s too late unless the IRA agreement used the 10 year rule as the default method and that is highly unlikely. The RMD method that applies became irrevocable at the end of 2024.
But it’s possible that because the IRS Regs do allow a good faith interpretation of the former or new rules prior to 2024 and the final Regs are not mandatory until 2025, it might be possible to make a case that the election should be allowed to be made now. Being a gray area, not sure if the beneficiary wants to attempt this. The IRA custodian is not going to force out an annual RMD. And if the beneficiary wants to pursue opt out for the Roth IRA only and not for the TIRA, that would be OK as well.
Beneficiary may not be old enough to benefit much from opting into the 10 year rule on the Roth. In 2033 he would still have around 11 years left in the stretch as an EDB.