How Long Can You Keep an Inherited Roth IRA?
Understanding the rules and regulations surrounding inherited Roth IRAs is crucial for anyone who has received such an account. One of the most common questions is, “How long can you keep an inherited Roth IRA?” The answer to this question can have significant implications for the financial future of the heir. In this article, we will explore the duration for which an inherited Roth IRA can be maintained and the factors that influence this timeline.
The first thing to note is that the length of time you can keep an inherited Roth IRA is determined by the original account holder’s age at the time of death. If the original account holder was younger than 59½ at the time of death, the heir must begin taking required minimum distributions (RMDs) by the end of the year following the year of death. If the original account holder was 59½ or older at the time of death, the heir can delay taking RMDs until the year following the year in which the original account holder would have turned 72.
Once the heir begins taking RMDs, they must continue to do so annually. The RMDs are calculated based on the account’s value as of the end of the previous year and the heir’s life expectancy. The life expectancy is determined using the Single Life Expectancy Table provided by the IRS, which takes into account the heir’s age and gender.
There are a few exceptions to the RMD rules for inherited Roth IRAs. If the heir is the surviving spouse of the original account holder, they can choose to treat the inherited Roth IRA as their own and continue to make contributions, as long as they do so within the first two years after inheriting the account. Additionally, if the heir is a minor or disabled, they may be exempt from taking RMDs until they reach the age of majority or become no longer disabled, whichever comes first.
It’s important to note that while the heir can keep an inherited Roth IRA indefinitely, they cannot contribute additional funds to it. The inherited Roth IRA can be rolled over into another Roth IRA or left as is. However, the heir should be aware that any withdrawals from the inherited Roth IRA may be subject to income taxes and penalties, depending on the circumstances.
In conclusion, the length of time you can keep an inherited Roth IRA is influenced by the original account holder’s age at death and the heir’s relationship to the deceased. By understanding the rules and regulations surrounding inherited Roth IRAs, heirs can make informed decisions about how to manage their inherited accounts and ensure they make the most of their financial benefits.
