The Slott Report

Backdoor Roth IRAs and Inherited IRAs: Today’s Slott Report Mailbag

QUESTION:

When someone under age 59½ uses the “backdoor” method of making Roth IRA contributions, does the 10% penalty apply to subsequent withdrawals if the IRA contribution was non-deductible?

Thank you,

John

ANSWER:

John,

The “backdoor Roth” contribution method involves making a non-deductible contribution to a traditional IRA, and then converting those dollars to a Roth IRA. Backdoor Roth IRA contributions are necessary for anyone with income that exceeds the annual Roth IRA contribution phase-out ranges. If the non-deductible dollars are then withdrawn from the Roth IRA after the conversion, there is no 10% early withdrawal penalty on those specific funds, regardless of a person’s age. However, any earnings on the non-deductible dollars would be subject to the penalty if they are received before the Roth IRA owner turns age 59½ (assuming no exception exists).

QUESTION:

Hello,

I am looking for some direction on how to title a beneficiary IRA. My mother passed away in March of this year at age 94, and my sister and I are 50/50 beneficiaries. The custodian wants to title the account as: “John R. Doe as beneficiary of Jane C. Doe IRA” (implying that Jane has died, rather than explicitly stating the fact). If I recall, the title should include “for the benefit of” and be something like: “Jane C. Doe deceased (3/28/2026) FBO John R. Doe, Beneficiary.” Please provide guidance on the proper title content and format.

Thank you and keep up the great work!

Jim

ANSWER:

Jim,

Sorry for the loss of your mother. As for the “proper” titling of an inherited IRA, there is no universally required method or set format. The deceased IRA owner’s name must remain on the account, and it must be clear that it is an inherited IRA. This is typically accomplished by using the words “beneficiary,” “beneficiary IRA” or “inherited IRA.” Both examples you provided are acceptable, although we prefer a title similar to what you suggested: “Jane C. Doe IRA (deceased 3/28/2026) F/B/O John R. Doe, Beneficiary.”

Copyright © 2026, Ed Slott and Company, LLC Reprinted from The Slott Report, April 30, 2026, with permission. Backdoor Roth IRAs and Inherited IRAs: Today's Slott Report Mailbag - Ed Slott and Company, LLC Ed Slott and Company, LLC takes no responsibility for the current accuracy of this article.

ED SLOTT: 12 QCD RULES YOU MUST KNOW

If you are charitably inclined and have an IRA, a Qualified Charitable Distribution (QCD) can be a great strategy. With a QCD, you can move IRA funds to the charity of your choice tax-free. Here are 12 QCD rules you must know.
1. QCDs are only available to IRA owners or beneficiaries who are age 70½ or older.
2. The maximum QCD amount is capped at $105,000 per person, per year.
3. Under the SECURE 2.0 Act, a one-time QCD of $53,000 (for 2024) can go to a split-interest entity, such as a charitable remainder annuity trust, charitable remainder unitrust or a charitable gift annuity.
4. Donor-advised funds do not qualify for QCDs.
5. A QCD can satisfy your required minimum distribution.
6. No double dipping is allowed! You cannot do a QCD and also take a deduction for the charitable contribution.
7. If you are married, you and your spouse can each contribute up to $105,000 from your own IRAs.
8. The contribution to the charity would have had to be entirely deductible if it were not made from an IRA. You cannot receive a benefit back.
9. The distribution from the IRA to a charity can satisfy an outstanding pledge to the charity without causing a prohibited transaction.
10. The charitable substantiation requirements apply. The charity will send you a written statement/receipt called a “contemporaneous written acknowledgment.”
11. QCDs can be done only with the taxable amounts in your IRAs.
12. QCDs cannot be done from SEP or SIMPLE IRAs that are actively receiving contributions.
Copyright © 2024, Ed Slott and Company, LLC Reprinted with permission Ed Slott and Company, LLC takes no responsibility for the current accuracy of this information.