Roth IRA’s and RMD’s
If I have a roth and pass away, is it true that my beneficary is required to take rmd’s. If so, how does it differ if it was in a roth 401(k) vs a roth ira?
If I have a roth and pass away, is it true that my beneficary is required to take rmd’s. If so, how does it differ if it was in a roth 401(k) vs a roth ira?
Permalink Submitted by Alan Spross on Sun, 2008-04-06 18:32
Yes, a non spouse beneficiary of a Roth IRA must take RMDs, but a spouse can assume the Roth IRA as their own and avoid RMDs.
A Roth 401k, unlike Roth IRAs has an RMD requirement at age 70.5 for owners. Therefore, unless still working for the employer providing the Roth 401k, it should be transferred to a Roth IRA prior to age 70.5. For a non spouse beneficiary, inheriting a Roth 401k vrs IRA has the same RMD requirement, although the taxation rules of the RMD can result in taxes being paid on the Roth 401k if the RMD occurs before the account attains qualification. In this respect, it is preferable to inherit a Roth IRA.
Also, note that until a correcting bill is passed by Congress, the 100,000 income limit applies to a rollover to a Roth IRA. This was unintended and will eventually be corrected, but if you wanted to roll it over right now, your modified AGI must be under 100,000.
Permalink Submitted by Robert A. Bove on Sun, 2008-04-06 19:43
Thanks Alan