Can a ROTH IRA owner designate how beneficiaries withdraw money?
Hello everyone,
I read in Kaye Thomas’ book, “Go ROTH”, a statement to the effect that a ROTH IRA owner can specify whether his/her beneficiaries will take their distributions following the 5 year rule or over their lifetime. I have never seen any beneficiary form that allows me to make that choice for my beneficiaries. Has anyone ever come across this? Does anyone have any idea if an owner could do this – and how you would accomplish it?
Thanks for any thoughts,
Bridget
Permalink Submitted by Alan - IRA critic on Tue, 2014-04-01 03:48
To limit the beneficiary’s options, the Roth would have to be left to a trust containing that requirement, and it would be enforced by the trustee of the trust.
Permalink Submitted by Bridget Baker-White on Wed, 2014-04-02 15:20
That makes sense; maybe that is what he meant. Thank you for the comment!
Permalink Submitted by Herm Brames on Thu, 2014-04-03 01:55
What if any would be the IRS tax implications for the trust or the trust beneficiary as these ROTH distributions came out of the trust?
Permalink Submitted by Alan - IRA critic on Thu, 2014-04-03 02:12
Assuming that the Roth had been held 5 years since the owner first contributed, all Roth distributions would be tax free whether taxable to the trust or passed through to the beneficiaries of the trust.