![]() ![]() If Lucy goes that way, most of the money will stay in the account and continue to grow tax-free. ![]() But she also has the right to set up an Inherited Roth IRA account. Lucy of course can take all the money out of the account when Ann dies without paying any tax on it. Let’s assume Ann passes before she remarries but names her only daughter Lucy as beneficiary before she dies. That means Ann has to make sure she selects the right beneficiaries once she gets the money as well. Once she rolls the Roth to her own account she can name any beneficiary she likes.Īnd by the way, it doesn’t matter what Tim’s trust says – the beneficiary designation determines where that money goes. ![]() Ann won’t ever be forced to take a Required Minimum Distributions (RMD) as long as she’s alive. But if she wants to continue that sweet tax free growth she can. She can take the money out of the Roth of course and not pay any income tax. That means the money will be treated as if she always had it in her Roth. Because she is the spouse, she can make Tim’s Roth her own. Tim named Ann as beneficiary of the account as I said. First we’ll tackle what happens to a Roth IRA after the owner dies. Will she have to take any distributions? Will they be taxable? What happens when Ann passes? Let’s answer these questions one by one. His wife Ann is the beneficiary of his Roth IRA. Tom, a very nice man recently passed away. If you’ve gone to all the trouble of setting up a Roth IRA you need to know what happens to that money after you are gone. ![]()
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