Dear Liz: I recently inherited a Roth IRA. If I understand correctly, I can leave the money in the IRA for 10 years. If I die before then and my adult son inherits the account, does he then get an additional 10 years to do something with the money?
Answer: That depends on the circumstances.
If you inherited this Roth IRA from your spouse, you can use your own life expectancy to calculate required minimum distributions, Luscombe says. If you die before emptying the account, your son typically would get 10 years from the date of your death to drain it.
The same rules apply if you are otherwise an “eligible designated beneficiary,” which includes disabled or chronically ill people and those who are not more than 10 years younger than the original Roth IRA owner.
If none of the above exceptions apply, however, you must empty an inherited Roth IRA by Dec. 31 of the 10th year following the original owner’s death. If you die before then, your son inherits your deadline along with the account. He doesn’t get a new 10-year period but must withdraw the money from the Roth by the same deadline that applied to you.
My husband recently died and I am the sole beneficiary of his Roth IRA. I believe I can add his investments into my own Roth IRA.
The information in the answer to the second question on yesterday’s article stated that I would need to take RMD’s on the inherited funds, since I am older than the age that RMD’s are required. The information on the IRS site says that I treat the inherited funds like my own.
Since I am not required to take distributions from my Roth IRA, why would I need to take RMD’s on the inherited funds? Is Liscombe wrong?
You have two options when you’re a spouse inheriting a Roth IRA: keep it as an inherited account or roll it into your own Roth IRA. If you roll it into your own Roth, you don’t face RMDs during your lifetime. If you keep it as an inherited account, you do.