Question:
Hello,
I have a question concerning inherited Roth IRAs. I know that in the past you have said that no annual required minimum distributions (RMDs) are required for these accounts. Does this include Roth IRAs that were inherited prior to the SECURE Act changes?
There is so much confusion about Roth IRA RMDs, so I wanted to be sure.
Thank you!
Answer:
You are right that there is a lot of confusion about when annual RMDs are required from inherited Roth IRAs! We often get questions on this topic.
If a Roth IRA was inherited prior to 2020 (before the SECURE Act), and the beneficiary was taking distributions over their life expectancy, those annual distributions must continue. Similarly, if a Roth IRA is inherited in 2020 or later and the beneficiary is an eligible designated beneficiary who is taking RMDs over his life expectancy, annual RMDs would be necessary.
However, if the Roth IRA beneficiary is subject to the SECURE Act’s 10-year rule, no annual RMDs are required during years 1-9 of the 10-year period.
Question:
Our client is age 78, and she has not taken her 2025 required minimum distribution (RMD) from her IRA yet. Can she transfer this IRA to a new institution without taking the RMD first?
Answer:
Yes, your client can go ahead and transfer the IRA to a new institution without first taking her 2025 RMD. There is a rule that says when an IRA owner does a 60-day rollover, the RMD must be taken prior to the rollover. However, this rule does not apply to direct transfers of IRA funds. She can transfer the entire amount. She just will need to remember to take her 2025 RMD from the new institution by December 31, 2025.
If you have technical questions you would like to have answered, be sure to submit them to mailbag@irahelp.com, to be answered on an upcoming Slott Report Mailbag, published every Thursday.
Inherited Roth IRAs and IRA Transfers: Today’s Slott Report Mailbag
Specializing in private wealth management, we provide education, guidance, and strategies to help you achieve a tax-efficient retirement income.
Specializing in private wealth management, we provide education, guidance, and strategies to help you achieve a tax-efficient retirement income.
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