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Roth IRA's under proposed RMD regulations


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Hi - these scenario pertains to ROTH IRA's - issues center around the role/rights of a surviving spouse beneficiary and also multiple beneficiaries when one is not an eligible designated beneficiary.  

Husband & wife each have Roth IRA's and are both older than 72.  Primary beneficiary on each is the spouse and there are 6 contingent non-spouse non-child beneficiaries who share equally.  5 of the contingent beneficiaries are  <10 years younger (thus,  eligible designated beneficiaries) and one is >10 years younger (thus, a non-eligible designated beneficiary).

Husband dies first - wife survives and changes ownership of his Roth IRA to wife before the end of the year following his death.   She names the 6 people (per above) as her beneficiaries.

 Questions: 

1.  Must wife take any RMD's from this Roth account during her lifetime?

 2.  Since one beneficiary is a non-EDB, upon wife's death, do the other beneficiaries lose their ability to use the 10 year exception (lifetime stretch)?  See  §1.401(a)(9)-4 (e)(2) multiple designated beneficiaries.

 3.  If after wife's death each beneficiary rolled their respective amount to a separate inherited IRA (in a manner similar to that outlined in §1.401(a)(9)-8(a) for separate accounting in a qualified plan), would the EDB's be able to use the 10 year exception (lifetime stretch)?

 4.  If 2 & 3 don't preserve the 10 year exception (lifetime stretch) for the EDB's, is there some other way to preserve it?

 5.  If the non-EDB rolls over her portion to an inherited Roth IRA, would RMD's be needed in years 1-9, or just full distribution by year 10?

 Thanks for your input/help!

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Hmm - posted my questions a little too early - got a call early this evening from someone at IRA National Office who worked on the proposed RMD regs - with usual caveats, here are the answers I received:

1.  Must wife take any RMD's from this Roth account during her lifetime?  NO
A.  Surviving spouse can elect to treat the deceased spouse's IRA as her own - §1.408-8(c)
B.  No lifetime distributions required for "owners" of Roth IRA's - §1.408-8(b)(1)(ii)

 2.  Since one beneficiary is a non-EDB, upon wife's death, do the other beneficiaries lose their ability to use the 10 year exception (lifetime stretch)?  YES
if assets are held in the deceased's IRA and not split into separate inherited IRA's for each beneficiary (per #3, below) - §1.401(a)(9)-4 (e)(2) - multiple beneficiaries

 3.  If after wife's death each beneficiary transfers their respective amount to a separate inherited IRA (in a manner similar to that outlined in §1.401(a)(9)-8(a) for separate accounting in a qualified plan), would the EDB's be able to use the 10 year exception (lifetime stretch)?  YES, if transfer occurs by the end of the year following death
A.  §1.401(a)(9)-8(a)(1)(i) - separate account treatment for multiple beneficiaries
B.  §1.401(a)(9)-8(a)(1)(ii) - timing requirements for establishing separate accounts

4.  If 2 & 3 don't preserve the 10 year exception (lifetime stretch) for the EDB's, is there some other way to preserve it?  N/A - see #3

 5.  If the non-EDB rolls over her portion to an inherited Roth IRA, would RMD's be needed in years 1-9, or just full distribution by year 10?  NO RMD's years 1-9
§1.408-8(b)(1)(ii) - owner treated as dying before his Required Beginning Date

 The good news is that I like the answers and won't have to bother with a comment letter ...

 

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