On the other hand, a Roth IRA is a plain vanilla IRA in reverse. You pay income taxes upfront at deposit. Result: every cent post-contribution appreciates safely without taxation thereafter. Period. Obviously, this tax-free feature can come in handy for retirement, but consider its inheritance benefit too. What if you were to leave a Roth IRA to an heir by listing them as a beneficiary? First, there is no income taxation burden that accompanies the Roth IRA when withdrawn by your heir. Second, the heir can elect to receive it as a tax-free lump sum or, what is often more useful, take scheduled RMDs over their lifetime much like an annuity (but without any income taxes due).

There are many options when it comes to IRAs, Roth IRAs, and inheriting such accounts. Be sure to consult with qualified legal and financial counsel to evaluate how to leverage a Roth IRA for yourself and your loved ones.

For more information please visit my estate planning website.

Philip J. Kavesh
Nationally recognized attorney helping clients with customized estate planning guidance for over 40 years.
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