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Posted by Alan on January 9, 2008, 3:07 pm
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John the Taxman wrote:
> A son inherits his mother's Roth IRA. He is under 59 1/2. What are his
> options ? Can he rollover the Roth into his own Roth ? Can he take some of
> the funds as a distribution, and roll over the balance into his own Roth ?
>
The son may not rollover the inherited Roth IRA nor may he treat
it as his own. It is an inherited Roth IRA. The son must follow
the rules set down for traditional IRAs as if the owner had died
before reaching age 70 1/2. These rules state that the son has a
choice. Distribute the whole balance by the end of the fifth
calendar year after the year of death or start taking minimum
required distributions based on his single life expectancy. The
first MRD is due in the year after death.
Any distribution would be tax-free as long as the owner died
after the five year period starting with the creation of the Roth
IRA. If the owner died before the five year period elapsed, then
distributions are taxable in the same manner they would have been
taxed if the owner had lived and taken the distribution. See the
ordering rules in Pub 590 to determine how much of any
distribution is tax-free and how much is taxable. Beneficiaries
are exempt from the 10% early withdrawal additional tax.
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