By Sarah Brenner, JD
Director of Retirement Education
QUESTION:
I am age 84. My IRA beneficiaries are my two children (ages 52 and 56) and my grandchild (age 8). Who is a non-eligible designated beneficiary (NEDB) and who is an eligible designated beneficiary (EDB)?
Bobby
ANSWER:
Hi Bobby,
It sounds like all of your beneficiaries are NEDBs under the SECURE Act’s rules for IRA beneficiaries and would be subject to the 10-year rule. They will not qualify as EDBs because they are not your spouse, disabled, or chronically ill. You might think that your 8-year-old grandchild could be an EDB because they are a minor child. However, only minor children of the account holder can qualify, not grandchildren.
QUESTION:
A Roth IRA must be open for five years for distributions for those age 59½ or older to be qualified. If funds are directly rolled over from a Roth 401(k) to a Roth IRA, does the five-year period start when the IRA account is opened or when the Roth 401(k) is opened?
For example, my employer has a Roth 401(k) and I (age 60) have been contributing for the last 10 years (since 2016). In 2026, I opened a Roth IRA to accept the direct rollover of my Roth 401(k). Has the five-year period been met (because the Roth 401(k) has been open for 10 years)?
Dean
ANSWER:
This is a confusing area of the rules! The funds from the Roth 401(k) that are rolled over to the Roth IRA will be considered basis in the Roth IRA because you are over age 59½ and have participated in the plan for more than five years. These funds will be available tax- and penalty-free immediately. However, the Roth IRA clock takes precedence for all future earnings. Assuming this is your first Roth IRA, any earnings that accrue in the Roth IRA after the rollover must remain in the account for five years from the year of the rollover in order to be distributed tax-free.
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.