Spousal Inherited Roth IRA | Ed Slott and Company, LLC

Spousal Inherited Roth IRA

In the case that a Roth IRA owner dies and leaves it to a spouse, the spouse can treat the Roth as his/her own, correct? No distributions have to be made if they are a sole beneficiary.

If a spouse is not a sole beneficiary, how does an inherited Roth get treated?

Yes, the sole surviving spouse beneficiary can elect to assume ownership of the Roth and it will be treated as if it was their own all along, therefore their 5 year holding requirement would start with the first contribution of either spouse.  If not a sole beneficiary the spouse can still transfer their interest to their own Roth IRA. That would avoid any inherited Roth RMDs.  In certain situations the spouse may choose to maintain the Roth as inherited, such as when they need distributions coming from recent conversions by the decedent. Taking beneficiary distributions of those conversion would waive the 10% penalty since the distribution is a beneficiary distribution.  But in most cases, the spousal rollover works better.

 

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