Retirement tax questions

Hello @gwh2 

Thank you for joining us today!

When they inherit your Roth IRA, and they are the Designated beneficiary, they will follow the 10-year rule.  If they are not the Designated beneficiaries, they will follow the 5-year rule, unless they qualify for the "Eligible designated beneficiary".  Here are the requirements:

• Spouse or minor child of the deceased account holder
• Disabled or chronically ill individual
• Individual who is not more than 10 years younger than the IRA owner or plan participant

An eligible designated beneficiary may

• Take distributions over the longer of their own life expectancy and the employee's remaining life expectancy, or
• Follow the 10-year rule (if the account owner died before that owner's required beginning date)

Designated beneficiary (not an eligible designated beneficiary)

• Follow the 10-year rule

Also note that, generally, inherited Roth IRA accounts are subject to the same RMD requirements as inherited traditional IRA accounts. Withdrawals of contributions from an inherited Roth are tax free. Most withdrawals of earnings from an inherited Roth IRA account are also tax-free. However, withdrawals of earnings may be subject to income tax if the Roth account is less than 5-years old at the time of the withdrawal.

I obtained this information from the IRS Website.  Here is that link with further Information:  https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-beneficiary 

I hope this answers your question and happy to answer any follow up questions you may have!

Holly W