Roth Beneficiaries

[Rianne]

Our Revocable Living Trust basically divides our estate 5i0/50 to DH side family and mine. I understand the tax implications for the tIRA and we will work to move those funds into Roth. It is also my understanding Roth beneficiaries can contribute and continue to get the tax deferred benefit of the Roth (for a time).



When beneficiaries sell our Roth inheritance, do they get the tax free benefit? This question also applies to my demise or DH demise. Will he/me inherit the Roth benefits of each other? My Roth goes to him and visa versa. I've tried to research this and am having a hard time getting that specific question answered. We have a new CPA in 2020. I'm not ready to slam him/her with these questions until we get to know him/her better.

 

[pb4uski]

I don't think that a beneficiary can contribute to an inherited Roth IRA.

Even if they could, I wouldn't suggest it... it is best to keep that inherited Roth separate so it being withdrawn in the 10 year period is obvious.... new money would make it much more complicated.

If you inherit his or vice versa, then it is as if it was yours from the start.

https://www.fidelity.com/viewpoints/retirement/surviving-spouse-IRA

... However, if the original account was a Roth IRA and the assets were in the account for 5 years or more, distributions may be tax-free. In either case, the registration type of both IRAs must match in order to transfer the assets from one account to another (e.g., traditional IRA to traditional IRA or Roth IRA to Roth IRA). If the assets were not in your spouse's Roth IRA for more than 5 years, it would be best to consult a tax advisor regarding how withdrawals may be taxed, and whether it's best to roll them into your own Roth IRA or keep them separate in an inherited Roth IRA.

 

[Rianne]

Thanks this is excellent
https://www.fidelity.com/viewpoints/retirement/surviving-spouse-IRA