By Andy Ives, CFP®, AIF®
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Both of my parents passed away last year. My mother passed earlier in 2022 and I was able to take her year-of-death RMD out of the inherited IRA before the end of the year. My dad passed in October and once I got the inherited IRA transferred over in December, I forgot to take his year-of-death RMD until January of 2023. What forms will I need to complete to request a waiver, and would this be a good cause for a waiver?
Sorry for the loss of your parents. Some good news is that you do not need to request a waiver for missing your dad’s year-of-death RMD. As of last year, the IRS granted an automatic waiver for a missed year-of-death RMD penalty if the RMD is taken by the beneficiary’s tax filing deadline, including extensions. Since you took the RMD in January, the year-of-death RMD has been satisfied, and no forms are needed.
I converted an IRA to a Roth seven years ago. I want to convert more IRA money to a Roth in 2023. My age is 64. When I convert the additional IRA money to a Roth: 1) Will I need to wait 5 years for this second conversion before I can take out any money? 2) Should I create a new account for the second conversion to keep the second conversion separate from the first conversion done 7 years ago? I’m getting different answers from different financial advisors/CPAs.
Thank you for your help.
The definitive answers are this:
1) No, you do not need to wait 5 years on the second conversion to take out any money. The entire balance is immediately available tax- and penalty free, including any earnings. This is because you have had ANY Roth IRA for 5 years AND you are over age 59 ½.
2) No, you do not need to create a second account for the second conversion – unless you want to. Whether you maintain multiple Roth IRAs or not, the IRS does not care. All they see is one consolidated Roth IRA under your name.