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Does an inheritance affect your ability to directly contribute to a Roth?

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  • Does an inheritance affect your ability to directly contribute to a Roth?

    My wife and I are currently in a low tax bracket, making about 100k combined a year, thus allowing us to contribute to Roth IRA's directly. A recent inheritance after the death of a loved one is expected at around 200k. Will we still be able to make a direct Roth contribution, or will we have to do a backdoor Roth? I'm guessing that it would have no bearing and that we could still make a direct contribution, but I'm not sure.

  • #2
    Sorry to hear it, JK.

    I don't think we can answer the question unless we know in what form the inheritance will be. Cash? Appreciated stock (cost basis resets)? Roth or traditional IRA?

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    • #3

      My wife and I are currently in a low tax bracket, making about 100k combined a year, thus allowing us to contribute to Roth IRA’s directly. A recent inheritance after the death of a loved one is expected at around 200k. Will we still be able to make a direct Roth contribution, or will we have to do a backdoor Roth? I’m guessing that it would have no bearing and that we could still make a direct contribution, but I’m not sure.


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      An inheritance is already taxed by the testator and, therefore not taxed to the beneficiary (legatee), no matter the form of property. Iow, your bequest should not affect your ability to contribute to a Roth. Fwiw, retirement accounts are not inherited; they go to whoever is listed as the beneficiary(ies) and pass outside the will. If you are listed as the beneficiary of a retirement account, you will be taxed only upon distribution and you will have some flexibility, depending upon your relationship to the owner of the account(s) and how you choose to liquidate the account(s).

      My condolences on your loss.
      Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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      • #4
        We will be the beneficiary of her life insurance policy that was in my wife's name.

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        • #5

          We will be the beneficiary of her life insurance policy that was in my wife’s name.


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          Not sure who 'her' is but it doesn't matter. Life insurance proceeds are not taxable to you.
          Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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