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Level 2
posted Jul 16, 2024 7:21:57 AM

Beneficiary Roth IRA Distribution

My unmarried, adult son opened and funded a Roth IRA in August 2018.

He named me Beneficiary on the account and he passed away in December 2022.

When can I withdraw the GAIN from my Beneficiary account tax-free?

0 5 12671
5 Replies
Level 15
Jul 16, 2024 8:34:38 AM

Earnings are taxable until you reach age 59½, and it's been at least five years since the account was opened. 

Level 15
Jul 16, 2024 9:57:52 AM

Because it has been more than 5 years since the beginning of the year for which your son first made a Roth IRA contribution, 2019, any distribution you receive as beneficiary of this Roth IRA is a qualified distribution free of any tax or penalty.  Your age is not a factor in determining whether or not a distribution from this beneficiary Roth IRA is taxable.

 

Because you are older than your son (you are not more than 10 years younger), you are an Eligible Designated Beneficiary.    This means that, unless you opted into the 10-year rule which would require the entire account to be drained by the end of 2032, beginning in 2023 you are required to have begun taking Required Minimum Distributions based on your age in 2023.

Level 15
Jul 17, 2024 1:16:39 PM

If you are more than 10 years younger, and named as a beneficiary, is it possible to avoid RMD each year?

 

@dmertz 

Level 15
Jul 17, 2024 2:37:35 PM

@fanfare , in that case, assuming that a different qualifying factor does not apply, the beneficiary would not be an EDB, so the 10-year rule would apply.  Under the 10-year rule, if the decedent died before their RBD no annual RMDs are required, otherwise annual RMDs are required.  With respect to a Roth IRA, the decedent is always deemed to died before their RBD (because the participant never has to take RMDs from a Roth IRA).

Level 15
Jul 18, 2024 7:07:21 AM

Thanks

I knew that.

Every situation I consider on the forum just adds more confusion versus the situation I'm anticipating.