INHERITED ROTH ACCOUNTS – NONSPOUSE
01.Core Concepts
BENEFICIARY • Inherited Roth Account (associated with an employer plan) five-year clock carries over to beneficiary • Inherited Roth account five-year period is independent of the beneficiary’s own Roth account • Distributions are nonqualified until the five-year period has been met • Beneficiaries will need to wait till the end of the original owner’s five-year period for each separate Roth account to receive qualified distributions • Non-qualified distributions follow the pro-rata rules for nonqualified distributions from Roth accounts INHERITED ROTH ACCOUNTS - EXCEPTION FOR THE SURVIVING SPOUSE • Inherited Roth Accounts can be rolled over to a surviving spouse’s own Roth account at their employer. • Five-year period ends at the earlier of the surviving spouse’s Roth account or the inherited Roth account 5-year period. • Spouse is treated as having always owned the inherited Roth account. • The penalty exception/triggering event for death does not apply to distributions during the spouse’s lifetime. • Minimum distributions will not be required during the life of the spouse.