Roth Conversion After Death of Owner

[jrobin415]

I am the executor for my mother's estate.  My brother and I are beneficiaries of her traditional IRA.  She died in July 2022.  Can we do a Roth conversion from her traditional IRA this year, after her death?

[Anonymous_ · Accepted solution]

I am sorry for your loss.

Unfortunately, you cannot treat this IRA as your own.

See https://www.irs.gov/publications/p590b#en_US_2021_publink100090419

[NCperson]

@jrobin415 - and maybe you already know this and were looking for a way around the rule..... you cannot convert an inherited IRA to a ROTH, unless you are the spouse.  I imagine the IRA is technically yours effective on the date of death, even though the paperwork hasn't made all the transfers.   

Be careful of the new rules related to IRA RMDs.  If you mother was subject to RMD, you must continue RMD's (based on your ages) and liquidate the IRA in 10 years.  if your mother was not subject to RMDs, you still have 10 years to liquidate the IRA, but are not subject to RMDs each year.  The rules are not final, final, but that is what the IRS has circulated.  It's complicated.

[fanfare]

If you are listed as beneficiary, the custodian can retitle the IRA into an inherited IRA with you as beneficiary now.

Then you can do what you want, as permitted by law.

 an Inherited IRA cannot be converted into a Roth IRA. 

@NCperson 

Not really that complicated as everyone seems to want people to think (see recent WSJ article).

You just described it quite succinctly.

[NCperson]

@fanfare - agreed but the complication is the impact it has on financial planning for heirs who though they could distribute the RMDs when THEY were retired over their remaining lives versus now many will have to distribute in high earning, working years - that is what complicates things, but is outside the scope of this Community Board. 

[fanfare]

"now many will have to distribute in high earning, working years"

That's exactly what Congress wanted - confiscation of the IRA.

It's evil.