Beneficiary of roth

  • Beneficiary of roth

    1 Reply
  • Top SubjectSolo 401k,My Solo 401k Financial
    Top ForumsSolo 401k, My Solo 401k Financial

    DIVINA KUMETZ
    Top SubjectSolo 401k,My Solo 401k Financial

    July 29, 2021 at 11:04 am

    Can my beneficiary after my death take distributions from my Roth 401k tax free and can they use the acct to buy or sell properties with tax free status

    DIVINA KUMETZ
  • Mark Nolan

    Top SubjectSolo 401k,Solo 401k Contributions
    Top ForumsSolo 401k, Solo 401k Contributions

    Mark Nolan

    Mark Nolan

    Top SubjectSolo 401k,Solo 401k Contributions

    July 29, 2021 at 2:02 pm

    If the beneficiary is not a spouse, the Roth solo 401k funds would get directly rolled over to a “beneficiary Roth IRA” for each non-spouse beneficiary, and they would then be required to empty out their respective beneficiary Roth IRA within 10 years (the 10 year rule which was plumaged by the SECURE ACT) . This means the beneficiary ROTH IRA will need to be fully distributed by December 31st of the tenth year following the solo 401k owner’s year of death. The Roth IRA distributions will be distributed tax free, of course.

    Note: Please also note in the event that you die before the 5-taxable-year period of participation with respect to your Roth 401k has passed, the non-spouse beneficiary will need to wait until 5-year period has been met in order to be able to withdraw the funds as a “qualified roth distribution” (note: qualified roth distribution requirement of taking the distributions “after your death” will automatically have been satisfied given your death). See discussion of “​What is a qualified distribution from a designated Roth account?” on IRS page HERE.

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