RetireNet.com

The Retirement Net Premier retirement living featuring retirement communities and retirement homes in planned active developments. Worldwide resource for active retirement senior communities, rv/resort homes, vacation homes and assisted living facilities. The Retirement Net is the most comprehensive resource of premier retirement communities throughout the world featuring site built homes, manufactured homes, assisted living facilities, planned active retirement communities and various retirement properties worldwide. See also: senior housing, retirement communities, retirement living, elder care network.

Welcome, Guest!   Sign InSign Up

Search by Location & Lifestyle...

Search

Or use our Advanced Search for either Communities or Homes

Search for listings in CanadaGo to Saved Searches

Our featured image is from the Southern California region.

Not a member yet? Sign up today!

Sign Up Sign Up

Find out more about the benefits of becoming a RetireNet.com member!

What You Need To Know About Inherited Roth IRAs

Add Article To Favorites Add to Favorites   Share  Recommend 0 Recommendations

Outlining the two basic options open to beneficiaries.

Posted September 15, 2012



When a Roth IRA owner dies, the money belongs to the beneficiary. Although Roth IRA owners never have to take minimum distributions during their lifetime, the beneficiary must take distributions after the Roth IRA owner dies.

Roth IRA beneficiaries have the same after-death stretch opportunity as if they inherited a traditional IRA. The only difference is that RMDs (required minimum distributions) from an inherited Roth IRA will generally be tax free.

There are two options for you as the beneficiary of a Roth IRA:

If you choose the 5-year rule, you must deplete the Roth IRA by the fifth year after the year of the owner’s death. If you choose the single life expectancy rule (also known as a stretch IRA), the money will be paid to you gradually over your single life expectancy starting the year after the owner’s death if you’re not the owner’s spouse. If you are the owner’s spouse, then you don’t have to start taking distributions until the year your deceased spouse would have turned age 70½.Choosing the single life expectancy option will allow the inherited Roth IRA to last longer and continue to grow tax free for you.

If you are the spouse beneficiary, you have a third choice that a non-spouse beneficiary doesn’t have; you can simply make the Roth IRA your own and never have to take distributions.

All Roth IRA contributions the owner made were not tax-deductible, so if you have inherited a Roth IRA, all of the contributions can be withdrawn tax free. The earnings can also be withdrawn tax free, as long as the account was held for more than five years (including the time the person you inherited from held the Roth IRA).

Ed Slott and Company has been called "The Best" source for IRA advice by The Wall Street Journal, and "America's IRA Experts" by Mutual Funds Magazine. Ed is a widely recognized professional speaker and author. Get more IRA information from America's IRA Experts.

 

Comments (0)

Add A Comment

Want to leave a comment? Sign in.

 
America's Top 100 Best Master-Planned Communities

My Saved Searches

Sign In or Create your free account to see your saved searches.