dmertz
Level 15

Retirement tax questions

The question was whether there would be any penalty.  Distributions to a non-spouse beneficiary of an inherited IRA, traditional or Roth, are never subject to an early-distribution penalty.

 

macuser_22's reply instead answers the question as to whether or not the distribution to the beneficiary would be a qualified distribution.  Until it has been at least 5 years since the beginning of the year for which the decedent first made a contribution to a Roth IRA, any distribution of earnings accrued within the Roth IRA are taxable.  Earnings come out last, so this is generally not a problem since the earnings are not required to be distributed before the 5-year period is met.