Ask Mary Beth: Money Q & A |
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Converting an Inherited IRA to a Roth IRA
I have an inherited IRA. I would like to convert it to a Roth IRA. Is this possible?
Mary Beth answers:
It depends on who you inherited the IRA from.
If you inherited it from your deceased spouse, you may roll over the funds into your own IRA and if you chose, convert your traditional IRA to a new Roth IRA.
Spouse beneficiaries have the most options when it comes to inheriting an IRA. In addition to rolling over the inherited IRA into their own IRA, spouses have the option to leave the funds in the decedent's name and continue to make deductible contributions to that account. Distributions do not have to begin until the decedent would have reached age 70 1/2.
If you inherited the IRA from anyone other than a spouse, however, you may not roll over the funds into your own IRA and consequently, would not be able to convert the account to a Roth IRA. However, you will be able to take distributions from the inherited IRA, and while you will have to pay income taxes on any money withdrawn, you will not be subject to an early withdrawal penalty if you are younger than 59 1/2.
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