Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

Thursday, August 30, 2012

Roth IRAs

IRAUnlike a normal IRA, when the owner of a Roth IRA dies the person that he or she has listed as the primary beneficiary must begin to take required minimum distributions. The good news is that these distributions are generally tax free. The beneficiary of the IRA has, generally, only two options for taking distributions: a five-year rule or a single-life rule. Under the first option, the beneficiary must take the total amount of the IRA within five years after the owner's death. If a beneficiary chooses the second option, the beneficiary can take the distributions over the course of his or her life. Here, a surviving spouse does not have to take from the IRA until the person reaches the age of 70 1/2. This allows the IRA to grow tax free. A surviving spouse and a non-spouse beneficiary can choose either option. There is a third option but it only applies to a surviving spouse. The spouse can choose to take the IRA and make it his or her own IRA. That gives the spouse the ability to forgo taking distributions.

Remember, even if the contributions that were made to IRA were not tax deductible, a beneficiary that withdraws from can take those distributions without incurring a tax.

See Joe Cicchinelli & Jared Trexler, What You Need To Know About Inherited Roth IRAs, The Slott Report, Aug. 29, 2012.

Special Thanks to Brian J. Cohan for bringing this article to my attention.


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