RMDs for an inherited Roth IRA with a spouse beneficiary

Submitted by Dan Garashvili on Wed, 2024-09-11 09:45

I believe that it used to be the case that a spouse who inherits a Roth IRA and does not make it his own, is required to take RMDs according to his Single Life Expectancy. That assuming, say, for the sake of a specific example, that both the deceased spouse and the surviving spouse were 80 years old at the death.

Following the final regulations, is such a spouse still required to take any RMDs from an inherited Roth IRA if he remains a beneficiary and does not become the owner?

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Permalink Submitted by Alan - IRA critic on Wed, 2024-09-11 11:17

If the surviving spouse does not elect to assume ownership, beneficiary RMDs are required for each year using the single life table or the spouse could elect the 10 year rule, opting out of EDB treatment. However, if the LE RMD is not taken nor the 10 year rule is chosen, the surviving spouse becomes the owner by default.

In this situation, the spouse should clearly elect to be treated as the owner. There would be no RMDs and the next beneficiary would be a designated beneficiary rather than a successor beneficiary.

Sec 327 of Secure 2.0 appears to alter the above rules for spouses that do NOT elect to be treated as the owner. The spouse would be automatically treated as the owner, but for RMD purposes only and because a Roth does not have RMDs, would avoid beneficiary RMDs, but the next beneficiary would be a successor beneficiary. To date, I have not seen an analysis of this being applied to a Roth IRA.

In either case, the spouse should elect to be treated as the owner, as there is no downside and the rules are clear. All this assumes that the spouse is the sole beneficiary of the Roth.