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Roth IRA - Spousal Beneficiary & 5-year clock


Dobber
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How does the 5-year clock work upon a surviving spouse (sole beneficiary) inheriting a Roth IRA?

For example,
Deceased spouse, 74, died earlier this year (2022)
Surviving spouse, 66, 100% primary beneficiary

The surviving spouse has the following options:
I am trying to wrap my head around the 5-year clock in re: to each of these options.

1. She can roll it into her current Roth IRA (treat it as her own) - Does the surviving spouse get the longer of - Clock in her own (previously established Roth) or the inherited Roth?
2 She can create a new inherited Roth IRA -Does she continue the 5-year clock? Or does it start anew because its now an inherited IRA?
3. She can treat the inherited Roth as as her own - Again, how does the 5-year clock work? Does she get the benefit of the years her husband held the account ?

Unrelated to the Roth clock -

Is there a situation where a surviving spouse would be subject to RMDs from an inherited Roth IRA?

 
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On 2/14/2022 at 2:13 PM, Dobber said:

1. She can roll it into her current Roth IRA (treat it as her own) - Does the surviving spouse get the longer of - Clock in her own (previously established Roth) or the inherited Roth?

She gets the earlier of the two clocks. So, whichever was funded first starts her 5-year clock

 

On 2/14/2022 at 2:13 PM, Dobber said:

2 She can create a new inherited Roth IRA -Does she continue the 5-year clock? Or does it start anew because its now an inherited IRA?

If she choose the inherited IRA option, the 5-year clock starts when his 5-year clock started

 

On 2/14/2022 at 2:13 PM, Dobber said:

3. She can treat the inherited Roth as as her own - Again, how does the 5-year clock work? Does she get the benefit of the years her husband held the account ?

See No 1

On 2/14/2022 at 2:13 PM, Dobber said:

Is there a situation where a surviving spouse would be subject to RMDs from an inherited Roth IRA?

if she choose the beneficiary IRA option , RMDs would begin by 12/31 of 2023.  Unless she elects the 10-year rule, in which case distributions would be optional until 12/31 of the 10th year following the year of death at which time the entire balance is the RMD.

 

 

Life and Death Planning for Retirement Benefits by Natalie B. Choate
https://www.ataxplan.com/life-and-death-planning-for-retirement-benefits/

www.DeniseAppleby.com

 

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17 hours ago, Appleby said:

if she choose the beneficiary IRA option , RMDs would begin by 12/31 of 2023.  Unless she elects the 10-year rule, in which case distributions would be optional until 12/31 of the 10th year following the year of death at which time the entire balance is the RMD.

 

What is the deadline to choose the 10 year payout?  For example, can she choose the RMD method and subsequently (for example, in year 3 stop RMDs and) switch to the 10 year rule?  Or does the option (10 year or RMD) need to made by 12/31 following the year of death?  Once chosen - is she locked in?

Thank you

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