Qualified ROTH IRA

Forum|Forum|7 years ago
June 3, 2019
1 reply
14 views

My wife is the trustee and beneficiary of a Living Trust. When her brother died in 2017, his Roth IRA was moved into the Living Trust. He had opened the Roth IRA in 2015. Normally, a Roth IRA has to be in place for 5 years before it becomes Qualified. However, we want to know whether it becomes Qualified when the person dies, if it occurs before the 5 year period. On the 1099-R we received, the Distribution Code was T. Should this distibution be taxable in this situation?

TurboTax Home & Biz Windows

Best answer by MichaelL1

The 5-year rule is still in effect on the Roth IRA.

I am enclosing a link below to part of the article as it provides some very good plain English explanation of this.

https://www.rothira.com/roth-ira-5-year-rule

Since death is an exception, when a Roth IRA owner dies, beneficiaries who take a distribution will not pay a penalty—no matter whether the distribution is principal or earnings (interest).

Death does not, however, eliminate the 5 tax-year rule for earnings to be tax-free. If you, as a beneficiary, take a distribution from an inherited Roth IRA that was not held for 5 tax years, the earnings will be subject to tax."

click on the link as it will tell you an order to take out if you do not wait for the 5 years.

MichaelL1Answer

Level 15

The 5-year rule is still in effect on the Roth IRA.

I am enclosing a link below to part of the article as it provides some very good plain English explanation of this.

https://www.rothira.com/roth-ira-5-year-rule

Since death is an exception, when a Roth IRA owner dies, beneficiaries who take a distribution will not pay a penalty—no matter whether the distribution is principal or earnings (interest).

click on the link as it will tell you an order to take out if you do not wait for the 5 years.