Roth Ira Distribution Rules After Death

This form is more important than many people realize. When you open a roth ira you fill out a form to name your beneficiary the person s who will inherit your account after you die. But those rules are pretty favorable.

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When the original owner of a roth ira perishes the executor must be aware of the following rules.

Roth ira distribution rules after death. Withdrawals must be taken after age 59. The assets are distributed to the beneficiary of the roth ira holder after the roth ira holder s death. The distribution rules that apply to an inherited roth ira are the same as the ones used for traditional iras in a situation where death occurs before the required beginning date for minimum distributions. As long as the original roth ira owner remains alive there are no required minimum distributions.

Only non spouse beneficiaries must take required minimum distributions after the death of the original roth ira owner. Withdrawals must be taken after a five year holding period. Roth ira withdrawal and penalty rules vary depending on your age and how long you ve had the account and other factors. Spouses don t have to begin annual distributions until the year the ira owner would have reached age 70.

This allows a spouse to defer annual withdrawals after the death of a young account owner. As far as the irs is concerned a roth ira distribution is considered qualified if your account meets the 5 year rule and the withdrawal is ade on or after the date you turn 59. This is true without regard to the age of the roth ira s owner at death because there is no required beginning date for distributions from roth iras. Before making a roth ira withdrawal keep in mind the following guidelines to avoid a potential 10 early withdrawal penalty.

In another example a 60 year old beneficiary who inherits a traditional ira not a roth ira and plans to retire in five years may decide to not take distributions from the inherited ira for the first five years and then take five equal distributions over the final five years of the ten year distribution period. After you depart the scene your roth ira beneficiary or beneficiaries must follow the same rmd rules that apply to inherited traditional iras. The distribution occurs after the roth ira holder becomes disabled.