Message Font: Serif | Sans-Serif
No. of Recommendations: 22
(An inherited ROTH IRA is still tax free, isn't it?

Distributions are taxed the same way they would have been to the decedent. (See more below.)

And doesn't require minimum distributions?)

Except for spouses, inherited Roths are subject to RMD's.

Does the 5 year holding period apply to people older than 59 1/2?


If my uncle starts converting his traditional IRA to a ROTH but dies before 5 years -- will the monies he has converted to a ROTH be converted back to a traditional IRA? and if it is, what becomes of the extra taxes paid due to the earlier conversions -- are they just lost?

The inherited IRA remains a Roth, and the 5-year clock keeps ticking, with credit for time ticked during his life. Eventually it will meet the 5 year test.

If the IRA is not converted (or not completely converted)in my uncle's lifetime, can an inherited traditional IRA be converted to an inherited ROTH IRA?


Having answered your questions, I claim my lecture time. You wrote:

I still think that gradually moving his money into a ROTH is the way to go. He will be leaving his IRA to me and I'd prefer to inherit a ROTH IRA.

Well, there's a shocker. I may be overreacting to a poor choice of words, but exactly whose interests are you looking after here? I don't know if you have a legal fiduciary role here or not, but on strictly ethical grounds you need to attend to your uncle's best interest, not yours.

Since passive voice has stuck again I don't know who told you that conversion wouldn't be cost effective, but that person may well have been telling the truth. You have said that the RMD's have sometimes kicked him into a higher bracket. That means that conversion income would also be in that higher bracket. You mentioned that at least once the RMD has meant a higher Medicare B premium. Conversion income could make this a regular occurrence.

It's certainly not clear to me that conversions would best serve your uncle.

Rule Your Retirement Home Fool
Print the post  


In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.