IRA heir to Conduit IRA

[Guest dcalme52]

5 beneficiaries of parents IRA ( father deceased passed to mother deceased) will take share of IRA and have been informed "conduit IRA" as the place to put distributions. Can this transaction be tax exempt, can the assests be rolled into Roth IRA... any suggestions will be appreciated!

[Bird]

My recollection is that a conduit IRA is a rollover IRA that holds only money rolled from a qualified plan. Back in the old days when you couldn't roll regular IRA money into a plan, you had to keep any prior plan money in a separate (conduit) IRA if you ever wanted to roll it back into a plan.

I've heard the term "beneficiary payout IRA" which is an IRA that is really the decedent's for RMD purposes but has the beneficiary's name on it for reporting purposes. I think it would be possible to set up 5 payout IRAs and let each bene dictate how rapidly s/he wants to pull it out...all subject to required minimums.

I don't think a Roth IRA is relevant to this case except that the distributions might provide funds for each beneficiary to fund his or her own Roth.

[Appleby]

...the term “ conduit IRA” is sometimes used to mean “ Inherited/beneficiary IRA”. You may want to check to make sure of the context in which the term is being used.

Non-spouse beneficiaries cannot rollover/converted inherited traditional IRA assets to a Roth IRA

[Guest dcalme52]

OK... if I choose to "cash out" and have taxes withheld, can I then use money any way I want without penalty?

[Appleby]

Distributions from inherited/beneficiary IRAs by non-spouse beneficiaries are always free from the 10 percent additional tax (AKA early distribution penalty)