Roth benificary
I do not plan taking any distributions from my Roth IRA.
Beneficiaries are my three children per stirpes.
I have been advised that MRD’s will not be taxable to my children, but will become taxable upon death of any of my children if their children, my grand children, become successor beneficiary designated by their parents.
Any clarification would be appreciated
Permalink Submitted by Alan - IRA critic on Wed, 2014-09-03 20:43
That advice is incorrect. Once a Roth IRA becomes qualified, it will never be taxable again either to the owner or to any successor beneficiaries of the owner. However, while the owner will not face RMDs, non spouse beneficiaries will have to take annual RMDs (or 5 year rule). The RMDs will be tax free. Once the beneficiary passes and the Roth goes to the successor beneficiary (eg from child to grandchild), the RMDs continue at the same rate as used by the original beneficiary. Like any IRA, the Roth will last longer if no distributions are taken in excess of RMDs. The Roth might get to a grandchild either by disclaimer or by primary beneficiary passing prematurely.