Taxability of Distribution from an Inherited Roth IRA owned by family trust
We have a client who inherited a Roth IRA from their mother in the name of their family trust 5 years ago and are looking to take a full distribution as required by the 5 year rule and want to confirm that the proceeds will have zero tax consequences. Are we both right in that assumption?
Permalink Submitted by Alan - IRA critic on Wed, 2024-09-18 20:38
As long as the first contribution made to the Roth IRA was prior to 2020, a full distribution to the trust will be tax free. If the trust was qualified for look through the 5 year rule would not have applied unless the trust elected it.