Menu
The fourth advantage of a Roth IRA is its tax-free inheritance benefit. Unlike a traditional IRA where heirs are required to distribute the account within ten years, subjecting those distributions to taxation, a Roth IRA allows for completely tax-free transfers to heirs. For instance, if you passed on a million-dollar Roth IRA to your heirs, they would still need to withdraw it over a ten-year period, but all those distributions would remain tax-free, preventing any risk of pushing your heirs into higher tax brackets. This makes a Roth IRA an attractive option for preserving wealth and passing it on to the next generation with minimal tax consequences.
Fourth advantage to a Roth IRA is that they pass to heirs completely tax free. So again, let’s say you had a $1 million traditional IRA and you passed it along to your heirs. They’d be forced to fully distribute the account inside of a ten year period, and all of those distributions would be taxable to your heirs.
So again, let’s say you had a million dollar IRA, passed it on to your heirs, and they took out a $100,000 distribution in that first year. That would count as $100,000 of income for your heirs, which could bump them up into the next tax bracket.
If that account was a Roth IRA, for example, all $1 million would pass completely tax free. Your heirs would still have to take it out over a ten year period, but all of those distributions would be tax free and would not be subject to bump them up into another tax bracket.
In 15 minutes we can get to know you – your situation, goals and needs – then connect you with an advisor committed to helping you pursue true wealth.
EWA, LLC dba Equilibrium Wealth Advisors, is an SEC-registered investment advisory firm providing investment advisory and financial planning services to clients.
Investments in securities and insurance products are not insured by any state or federal agency.
To view EWA’s public disclosure, registration, Form ADV and Part 2B’s, click here.
To view EWA’s Client Relationship Summary (CRS), click here.
