From 24/7 Wall St. · David Beren · · 1m 30s
Inherit Father's IRA at 60, Try Roth Conversion to Stop Ten-Year Clock
60-year-old inherits $250,000 IRA but custodian blocks Roth conversion to avoid ten-year clock.
In brief
60-year-old inherits $250,000 IRA but custodian blocks Roth conversion to avoid ten-year clock. A 60-year-old heir cannot convert an inherited traditional IRA to a Roth IRA to skip the ten-year withdrawal deadline, as tax rules require annual withdrawals for non-spouse beneficiaries. Originally reported by 24/7 Wall…
Inherited IRA at 60
A 60-year-old inherits their father's $250,000 traditional IRA.
Custodian Blocks Roth Conversion
The custodian says no to converting the inherited IRA to a Roth IRA to skip the ten-year clock.
Why Conversion Is Blocked
Non-spouse beneficiaries cannot convert inherited traditional IRAs to inherited Roth IRAs under tax rules.
Employer Plan Opens Window
If money is in a 401(k), a direct rollover to an inherited Roth IRA is possible with tax due that year.
RMDs Start After 2020
Heirs must take annual required minimum distributions starting in year one after the owner's death.
Exceptions to Ten-Year Clock
Eligible designated beneficiaries like minors or disabled heirs avoid the ten-year rule with lifetime withdrawals.
Tax Impact of Timing
Tax savings come from spreading withdrawals over years after retirement to stay in lower tax brackets.
Medicare and Social Security Rules
Medicare premiums and Social Security taxes apply based on inherited IRA withdrawals.
Mistakes That Make It Worse
Mixing inherited IRA with personal IRA triggers 25% excise tax on missed RMDs.
What to Do Next
Check if money is in an employer plan before attempting a rollover to an inherited Roth IRA.
The bottom line
A 60-year-old heir cannot convert an inherited traditional IRA to a Roth IRA to skip the ten-year withdrawal deadline, as tax rules require annual withdrawals for non-spouse beneficiaries.
