Must a Surviving Spouse Take a Required Minimum Distribution From a Roth IRA?

by Mark Kennan

    Taxes from distributions from a retirement account are likely the last thing on your mind when your spouse dies. However, the wrong decision could cost you in extra taxes and penalties. Whether a spouse is required to take minimum distributions from a Roth IRA inherited from the deceased spouse depends on how the surviving spouse elects to treat it.

    Taking Ownership

    A surviving spouse has the option to take ownership of the inherited Roth IRA. In that case, the Roth IRA is treated as if the surviving spouse had always been the owner of the account, and therefore no distributions are ever required as long as the surviving spouse lives. To take this option, the surviving spouse must be the sole beneficiary of the account. This election can be made at any time.

    Downside to Ownership

    If, as the surviving spouse, you declare yourself the owner of the inherited Roth IRA, you can't take advantage of the special treatment for Roth IRA beneficiaries. Once you've made the election, you're not a beneficiary anymore. Instead, you must wait until not only the account has been open for 5 years, but also until you are 59 1/2 years old, permanently disabled or using up to $10,000 for a first home purchase.

    Delayed Required Distributions

    If you don't elect to treat the inherited Roth IRA as your own, as a surviving spouse you can elect to delay required minimum distributions until you turn 70 1/2 years old. If you inherited a Roth IRA from someone other than your spouse, you must start taking required minimum distributions the year after the decedent dies. This allows you to take advantage of the tax-sheltered growth in the Roth IRA for a longer period of time.

    5-Year Rule

    You also have the option to empty the account by the end of the fifth year. Under this option, no distributions are required until the fifth year. This might be advantageous if you will reach age 59 1/2 within 5 years. You can take advantage of the beneficiary exception to early withdrawal penalties for the first few years, if necessary, and then elect to treat the Roth IRA as your own after you turn 59 1/2 so that you can take qualified distributions.

    About the Author

    Mark Kennan is a writer based in the Kansas City area, specializing in personal finance and business topics. He has been writing since 2009 and has been published by "Quicken," "TurboTax," and "The Motley Fool."

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