inherited Roth IRA
The example and answer below is from a prior inquiry I made to this forum in late April of ’23. How do I reconcile your answer below with the statement on the IRS website that “Generally, inherited Roth IRA accounts are subject to the same RMD requirements as inherited traditional IRA accounts.”
Example:
Roth IRA owner died in 2020 at age 85 (after the first Secure Act of 2019 was passed). Now that Secure Act 2.0 was signed into law late Dec ’22, what would be the Required Minimum Distribution (RMD) for 2023 for a non-spouse beneficiary?
ANSWER
The 10-year rule applies, but there are no annual RMDs for years 1–9 because this was a Roth IRA. Even though the Roth IRA owner died at age 85, he is considered to have died before reaching his RMD (since Roth IRA owners are not subject to lifetime RMDs). So, the only RMD would be the full inherited Roth IRA balance that must be withdrawn by the end of the 10th year after death—in this case by the end of 2030.
This is a big advantage that inherited Roth IRAs have over traditional inherited IRAs.
Hopefully, these Q-and-As will help you untangle the complex RMD questions you will no doubt be receiving from IRA beneficiaries this year.
Ed Slott, CPA, is a recognized retirement tax expert and author of many retirement-focused books.
Permalink Submitted by Alan - IRA critic on Thu, 2024-04-04 19:13
The RMD rules are generally the same, but one exception is that the Roth owner always passes prior to RBD, so the Roth RMD requirements are the same as a TIRA owner that also passes prior to RBD (no annual RMDs in years 1-9 of the 10 year rule). But a TIRA owner that passes on or after RBD will be required to take annual RMDs in years 1-9, but that will never be the same for a Roth beneficiary.