can a roth ira be taxale to my heir?
I have a roth ira my revocable trust is the beneficiary. when I pass on, is the roth ira still tax free ? thank you
I have a roth ira my revocable trust is the beneficiary. when I pass on, is the roth ira still tax free ? thank you
Permalink Submitted by Alan Spross on Sat, 2010-09-11 23:05
It will be tax free except for earnings withdrawn before the Roth is 5 years old counting both your holding period and the period after your death. And since the earnings would come out last, the chances of any tax would only exist for very large withdrawals before the 5 year holding period is up. Your IRA should be left to a trust only for specific reasonsm eg if the beneficiary is not financially capable or responsible. Without a specific and valid reason, it is better to name the beneficiary outright as IRA beneficiary.
Permalink Submitted by paul lolicata on Tue, 2010-09-14 23:08
thank you very much for your reply. best wishes, pablolo