Roth IRA for Wealth Transfer

How a Roth IRA can save your heirs tax dollars

When beneficiaries, other than your spouse or children, inherit your non-Roth
IRA, they will have to withdraw the funds based on your life expectancy. And the
distributions will be considered taxable income to the recipients. However, with a
Roth IRA, the original accountholder’s age is not a factor when determining the
payout schedule since the Required Minimum Distribution Rule (RMD) does not
apply.

Rather it is based on your heir’s life expectancy. Therefore, your beneficiaries
have the opportunity to leave more money in the Roth and for a longer period of
time than they could with a non-Roth IRA. For example, suppose you left your
Roth IRA to your 30-year old granddaughter. She would have the option to take
withdrawals over the next 53 years instead of over your shorter life expectancy.
She will, however, have to make the first withdrawal by December 31 of the year
after your death to qualify for the lifetime income stream.

As long as the assets have been in a Roth for at least five years, money
coming out of the account is income tax free, no matter who takes it out. Nor
does it matter how much they withdraw. But the more money that can stay in the
account, the more that can accumulate tax-free. This tax-free compounding can
possibly mean greater growth when compared to taking the non-Roth inherited
funds over a shorter period of time then investing in a taxable account.
No one particularly likes to pay income taxes. And when you convert your IRA
to a Roth, you will have to pay on the total transferred. But look at it this way:
You’re paying today to help your heirs build a tax-free nest egg for the future.

I can help you understand the complex rules on inherited IRAs, Roths, and
other investments. Return the enclosed coupon, and I’ll call you to schedule a
time to meet.

What steps can you take to provide yourself with a comfortable retirement?
Please contact me to learn more. If you would like to meet either in person or by telephone, please use the CONTACT US link and let me know.

I look forward to meeting you!