Roth IRAs are popular accounts for investors to leave to their heirs because of these accounts’ tax-free status and lack of required minimum distributions (RMDs) during the original owner’s lifetime.
Roth contributions are made with after-tax money, and any distributions you take are tax-free as long as you are at least 59½ years old and have had a Roth IRA account for at least five years.
Your beneficiaries can continue to enjoy this tax-free status for a period of time after they inherit the account. However, they will not be able to maximize their tax savings with the Roth account unless it’s passed down in the correct manner. Here’s what you need to know.
Key Takeaways
- By leaving your Roth IRA to your heirs, you can provide them with tax-free income for years to come.
- Make sure you designate your beneficiaries when you open the account and change them in the future…
