Rollovers and Inherited IRAs: Today’s Slott Report Mailbag

Thursday, January 23, 2025

By Sarah Brenner, JD
Director of Retirement Education

Question:

I have a large non-qualified 457 deferred compensation plan and I am required to take distributions. I am looking to minimize taxes. Can I roll over these funds to an IRA?

Answer:

Unfortunately, this will not work. A non-qualified deferred compensation plan is not eligible for rollover to an IRA.

Question:

Hello,

I had a question concerning inherited Roth IRAs. I know that in the past you have said that no required minimum distribution (RMD) is required for these accounts. Does this include inherited Roth IRAs that were created prior to the SECURE ACT changes? There is so much confusion on Roth IRA RMDs, so I wanted to be sure.

Thank you!

Kade

Answer:

Hi Kade,

This is an area of great confusion! Non-eligible designated Roth IRA beneficiaries (NEDBs) are not required to take annual RMDs during the 10-year period. However, there are other situations where annual RMDs are required for Roth beneficiaries. Roth IRA beneficiaries who inherited prior to 2020 (when the SECURE Act became effective) must still take these annual RMDs. Eligible designated beneficiaries (EDBs) who inherited after SECURE and are using the “stretch” must also take annual RMDs from an inherited Roth IRA.

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