The Motley Fool Discussion Boards
Financial Planning / Tax Strategies
|Subject: Re: Roth IRA Estate Planning||Date: 12/15/1998 9:23 AM|
|Author: TMFTaxes||Number: 7206 of 121061|
[[I've been looking for an answer to a simple question without any luck:]]
Are there really any "simple" tax questions?? Let's find out.
[[ Upon death of the Roth IRA
owner, does the money bypass estate taxes when transferring to the beneficiaries.]]
Nope. The value of the Roth IRA account will be included in the estate (same as a regular IRA). The difference is that the value of the Roth IRA can pass through to beneficiaries on a tax free basis (if done correctly).
This is different from a regular IRA. If you die with a regular IRA, that IRA is included in the estate, AND the beneficiaries are also taxed on the distribution of the IRA. So you are really paying taxes on the same money twice...once at the estate level and once at the beneficiary level.
So the Roth IRA is certainly a powerful estate planning tool...one that should not be overlooked in an overall estate plan.
[[ Since my mom doesn't need the money in her IRA, our overriding concern is estate planning.]]
As well it should be. But just because the Roth IRA will be included in Mom's gross estate may not necessarily override the decision NOT to convert.
Want to learn more about taxes and investing? Then we have a deal for you!! The Motley Fool Investment Tax Guide is now available through Fool Mart. Be the first one on your block to own this masterpiece. There is still time available to do that tax planning (and tax saving) before the end of the year. So just click on this link (http://www.foolmart.com/market/product.asp?pfid=MF+013+I) to read more about this amazing collection of tax information. (Apologies for the shameless plug…but it is a pretty good book…if I do say so myself). In addition, if you would like to visit the Taxes FAQ (Frequently Asked Questions) area, click on http://www.fool.com/school/taxes/taxes.htm and you'll be right at the home page. Pay special attention to the "archives" section. Check it out. Finally, if you need to get to the IRS web site, click on http://www.irs.ustreas.gov to go directly there.
As always, thanks for your help.
|Copyright 1996-2014 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us|