Inherited IRA

[Forensicacctnt]

In reference to the tax act passed in December, 2019, I am trying to find out if a ROTH IRA is inherited by a son or daughter in which RMD's have been going on does the law change say the total amount must be taken out within 10 years? Thus there is no option to base continuing RMD's for the son or daughter's based on the tables used prior to the law change?
Same question for a traditional IRA. Thank you.

[RWG1950]

It is my understanding that under the pre-Secure Act rules, a beneficiary of a Roth IRA did have an RMD requirement.
The wording of the post seems to be asking about a child bene of the original bene, who had been taking RMD's from a Roth IRA they had inherited, pre 1-01-20.
The issue may involve the starting point for the subsequent bene on which to base interpretation of the new law ?
Haven't seen anything on this specific question, but since pre-2020 deaths seem to allow for continued stretch of IRA's that might also apply here.
Hopefully people with higher pay grades will be able to post some insight on this.

[rbynaker]

The rules were complicated enough before and now they are even more complicated. Unfortunately in this area of tax law, you can't ask a simple question and get a simple answer. I'm hoping when TTB updates this section next year they come up with a flowchart. Just thinking out loud there are different rules if the deceased was before or after RMD age, if the beneficiary was spouse or non-spouse, now we're adding if the death was before or after 12/31/19 and if the beneficiary is an Eligible Designated Beneficiary which can then change when they reach the age of majority if they're only eligible because they are a minor child.

OP: I think we're not exactly understanding your question, can you give a more specific example, maybe with a timeline?

I think in broad strokes your question is about when rules change. Any beneficiaries who already inherited up to 12/31/19 are basically grandfathered. The triggering event for the new rules to apply is death. Either death of the account holder, or death of the current beneficiary (in the case of an inherited inherited IRA).

Rick

[Forensicacctnt]

I will clarify my question: The account owner is living and has a ROTH IRA. He asked me that when he passes and his two sons are presently the beneficiaries of the ROTH IRA, what does the law require of them to do related to distributions. The sons are now of majority age. Does the law passed in December, 2019 simply say in this example that the sons must complete in full the distribution of what they each inherit with five years?

My other question in my original post is inquiring about traditional IRA's. If a child of majority age inherits from a parent when they pass away a traditional IRA the child must complete the full distribution of the account within 10 years? Also, if the parent had been taking RMD's prior to their death, what is the child required to do in this situation, i.e. do they continue with RMD's based on their age, etc. or do they simply have to complete the distribution within 10 years? Thank you!

[rbynaker]

Thanks for clarifying. I believe the new 10-year rule applies in both of those cases.

[Burke]

The new 10-year rule applies for both types.
One option (at least for the Roth IRA) is for the beneficiary to leave the funds in the account, to grow tax-free, until close to the end of the 10-year period.FE

Wouldn't this depend on the bene's future anticipated income? Maybe 1/10 withdrawal over 10 years would be less tax. Need a crystal ball.

[Lion]

A Roth won't have tax, but you might want it to grow as much as possible before distributing it.

[Burke]

You're right. I was thinking of a regular IRA, not a ROTH.