By Sarah Brenner, JD
Director of Retirement Education
Question:
I just inherited an IRA from my sister. She died at age 74 and I am age 78. Am I required to use the 10-year rule, or can I stretch distributions from the inherited account over my life expectancy? I am hearing conflicting information as to what my options are.
Answer:
You are considered an eligible designated beneficiary (EDB) under the SECURE Act because you are older than your sister. EDBs include any beneficiary who is “not more than 10 years younger than the IRA owner.” Being older qualifies. Because you are an EDB, you are not subject to the 10-year rule. Instead, you have the ability to stretch distributions from the inherited account over your single life expectancy.
Question:
I just started participating in a SIMPLE IRA plan at my job. I would like to convert my SIMPLE IRA funds to a Roth IRA. Can I do this?
Answer: There is a two-year waiting period before SIMPLE IRA funds can be converted to a Roth IRA. This waiting period begins with the first contribution to the SIMPLE IRA.
If you have technical questions you would like to have answered, be sure to submit them to mailbag@irahelp.com, to be answered on an upcoming Slott Report Mailbag, published every Thursday.
https://irahelp.com/slottreport/inherited-iras-and-roth-conversions-todays-slott-report-mailbag-2/
