A qualified distribution from your Roth IRA may be made after a five-year waiting period has been satisfied (this period begins January 1 of the tax year of your first Roth IRA contribution or Roth IRA conversion, if earlier) and you (i) are age 59½ or older, (ii) are disabled, (iii) qualify for a special purpose distribution such as the purchase of a first home (lifetime limit of $10,000), or (iv) are deceased. If you receive a nonqualified distribution from your Roth IRA, any earnings distributed generally will be subject to ordinary income tax, plus a 10% additional federal tax if received before age 59½ unless an exception applies.
2 Effective January 1, 2020, in accordance with new legislation, the required beginning date for RMDs is age 72. You may defer your first RMD until April 1 in the year after you turn age 72, but then you’d be required to take two distributions in that year. Failure to take all or part of an RMD results in a 50% additional tax applicable to the amount of the RMD not withdrawn. Consult your tax advisor for more information on your personal circumstances.
3 An eligible designated beneficiary is a surviving spouse, disabled or chronically ill individual, an individual who is not more than 10 years younger than the decedent, or a child of the account owner who has not reached the age of majority. Eligible designated beneficiaries may generally take distributions of their inherited IRA assets over their own life expectancy, subject to special rules for minor children and surviving spouses. Individuals other than eligible designated beneficiaries generally must take distributions of their inherited IRA assets by the end of the 10th calendar year following the year of the decedent’s death. Most entity beneficiaries would continue to follow the five-year rule. This applies to distributions where the decedent passed away after December 31, 2019. If the decedent passed away on or prior to December 31, 2019, you may be able to stretch the account over your life expectancy, but your beneficiary who inherits the account from you would be subject to the 10-year rule. Check with a tax advisor regarding your specific situation.
Merrill, its affiliates, and financial advisors do not provide legal, tax, or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.