By Ian Berger, JD
IRA Analyst

More and more 401(k) plans are making Roth employee contributions available, and employees leaving their jobs often want to roll over Roth 401(k) funds to a Roth IRA. What tax rules apply to distributions of amounts rolled over? Warning: The rules are complicated because they involve two five-year holding periods, one for the Roth 401(k) distribution and the other for the Roth IRA distribution.

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Q: I have a question about an inherited Roth IRA. If a person inherits a Roth IRA in 2023, do they have to take required minimum distributions (RMDs) during the 10-year payout period? My spouse’s mother died in 2023 at the age of 95. In 2024 my spouse decided to take an RMD because it was unclear if he needed to. We would prefer to allow the money to compound as long as possible, before taking any distributions.

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Q: I have three SEP IRAs with three different custodians. I still contribute to one of the SEPs on an annual basis. I am over age 70½. Can I take a qualified charitable distribution (QCD) out of one of the SEP IRAs I am not contributing to?

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Q: If a person is turning 73 years old in March, s/he would be required to take required minimum distributions for the year. Can a person do Roth Conversion prior to turning age 73 (say in February)?  Does the first money out rule still apply?

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Q: I inherited my brother’s Roth IRA in 2018 and take required minimum distributions (RMDs). Under the SECURE Act, does the beneficiary I name on this account continue taking RMDs based on my schedule? If so, do they do so for 10 years and then empty the account in year 10?

Or, do they not have to take any distributions until year 10?

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