Part 10 of 10 Things You Must Know About Roth Accounts
Unlike traditional IRAs—which you must begin to tap at age 70 1/2—Roth IRAs have no minimum distribution requirements for the original owner. So, if you don’t need the money, it can grow in the tax shelter until your death. If your spouse inherits the account, he or she never has to make withdrawals, either.
If the Roth IRA passes to a nonspouse heir, the rules change. They are required to take minimum distributions starting the year following the death of the original owner, or empty the account within five years of the account owner’s death. Distributions, though, will still be tax-free and can be stretched over the beneficiary’s life time.A young child or grandchild who inherits a Roth has the potential for decades of tax-free growth.
Wealthy taxpayers may find another estate-planning advantage to a Roth conversion. The taxes paid on a Roth conversion will be removed from their taxable estate.