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Do I have to Take Required Minimum Distributions (“RMDs”) for a Roth IRA?

With a Roth IRA, one is not required to take required minimum distributions, like a Traditional IRA.  In addition, if a Roth IRA holder passes away and leaves his or her Roth IRA to a spouse, that spouse is not required to take any required minimum distributions (“RMD”) with respect to the Roth IRA.  However, if the Roth IRA is left to a non-spouse, that person must start taking RMDs on that Roth IRA based on the life expectancy of the recipient.

Spouse named as beneficiary

In sum, If a spouse is named as the primary beneficiary of a Roth IRA, the spouse would typically roll the assets into their own Roth IRA (and name their own beneficiaries).  The spouse would have no RMD requirements. In other words if you inherit a Roth IRA from your spouse, you generally have the following three choices. You can:

-Treat it as your own IRA by designating yourself as the account owner.

Treat it as your own by rolling it over into your Roth IRA

-Treat yourself as the beneficiary rather than treating the IRA as your own.

Non-spouse named as beneficiary

Non-spouse beneficiaries who inherit Roth IRAs cannot roll the Roth IRA into their own name or account.  Hence, they will could be required to take RMDs with respect to the inherited Roth IRA account. However, the following options are available:

  • Lump-sum distribution
  • Deplete the entire balance before the end of the fifth year following the year of the IRA holder’s death (generally called the five-year rule)
  • RMDs based on their own life expectancy, determined by referencing the IRS Single Life Expectancy Table

Thus, receiving a Roth IRA from a spouse has far more tad advantages than an inherited Roth IRA since a spouse receiving a Roth IRA is not required to take required minimum distributions.

For additional info on the Roth IRA required minimum distribution rules please contact a Roth IRA expert at 800-472-0646

 

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