If you are the direct beneficiary on a Roth IRA - doesn't pass through an estate, simply a matter of filing a death certificate and filling out some forms (if it matters) - and you don't know whether you are going to keep the IRA in your own name, cash it, what is the best route to take? If it's turned into your name and then you cash it are there additional fees? How about the tax picture?

The stockbroker is no help whatsoever and doesn't seem to understand the question.

First, the Roth IRA does indeed "pass through the estate," in that it is considered an asset of the estate for calculating any estate taxes that may be due. I think what you mean to say is that the IRA does not go through probate, since it passes to the named beneficiary by contract rather than through the decedents will.

If the Roth IRA has been in existence at least 5 years, as the beneficiary you can take tax-free withdrawals, even if you are under 59-1/2 years of age. If the Roth IRA is less than 5 years old you only have to pay income taxes on the portion of a withdrawal that is attributable to earnings.

If you are the spouse of the deceased, you have the option of rolling the inherited IRA into your own IRA (in which case you can't start withdrawals without penalty until age 59-1/2). If you are not the spouse, you are not allowed to roll it into your IRA, but must keep it separate, and you are required to meet certain minimum distribution requirements, such as either taking a complete distribution within 5 years of the previous owner's date of death or setting up a series of payments throughout your lifetime.

Here'a pretty good web site that provides details:

Inherited Roth IRA (http://www.fairmark.com/rothira/inherit.htm)

First, the Roth IRA does indeed "pass through the estate," in that it is considered an asset of the estate for calculating any estate taxes that may be due. I think what you mean to say is that the IRA does not go through probate, since it passes to the named beneficiary by contract rather than through the decedents will.

If the the Roth IRA has been in existence at least 5 years, as the beneficiary you can take tax-free withdrawals, even if you are under 59-1/2 years of age. If the Roth IRA is less than 5 years old you only have to pay income taxes on the portion of a withdrawal that is attributable to earnings.

If you are the spouse of the deceased, you have the option of rolling the inherited IRA into your own IRA (in which case you can't start withdrawals without penalty until age 59-1/2). If you are not the spouse, you are not allowed to roll it into your IRA, but must keep it separate, and you are required to meet certain minimum distribution requirements, such as either taking a complete distribution within 5 years of the previous owner's date of death or setting up a series of payments throughout your lifetime.

Here'a pretty good web site that provides details:

Inherited Roth IRA (http://www.fairmark.com/rothira/inherit.htm)


Thank you for the most comprehensive answer and the site - I think I have a problem because the Attorney advised me (and, yes, I am the widow - as painful as it is for me to say that word) that the value is NOT part of the estate and was NOT listed on the probate petition and that as beneficiary this account is much the same as the proceeds of a life insurance policy - ? I am going to check the site and call the Attorney -

I think you have confirmed my suspicion which is that the best thing to do is take a complete distribution now rather than tie the entire account up and wait for the various age requirements to roll around.

Again - thank you very much.

Thank you for the most comprehensive answer and the site - I think I have a problem because the Attorney advised me (and, yes, I am the widow - as painful as it is for me to say that word) that the value is NOT part of the estate and was NOT listed on the probate petition and that as beneficiary this account is much the same as the proceeds of a life insurance policy - ? I am going to check the site and call the Attorney -

I think you have confirmed my suspicion which is that the best thing to do is take a complete distribution now rather than tie the entire account up and wait for the various age requirements to roll around.

Again - thank you very much.

Your welcome, and my most sincere condolences to you. I think your attorney is saying pretty much what I am - that the IRA passes directly to you without having to be listed as a probatable asset, similar to a life insurance policy. I was only pointing out that IF estate taxes are due - which they're not since you are the surviving spouse - then the value would have had to be included in any estate tax filings. Here it's a moot point.

I agree with your conclusion about taking the distribution. Good luck.