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Author: philharr Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75776  
Subject: death of IRA owner and distribution Date: 1/18/2001 1:30 PM
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If my spouse & I each contribute $2000 to a Roth IRA and one dies, I assume the money goes directly to the "beneficiary." The question I have is: how is this influenced by tax laws. Will the beneficiary loose a significant amount of this money due to taxes? Is there no way to have joint account IRA's so that the money stays with the other individual rather than be paid out to a beneficiary?

Thanks for your help with this.

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Author: thehendrys Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 27303 of 75776
Subject: Re: death of IRA owner and distribution Date: 1/18/2001 1:37 PM
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I've wondered the same thing.

It seems that you would not be required to take any distributions from the IRA, so there would be no tax consequences in that case. The IRA would just sit there and grow until you are 59 1/2.

However, I wonder if all the other rules would still apply. For instance, are you allowed to withdraw all of the money that was contributed by your spouse without taxes or penalties - like you are in your own Roth IRA?

Looking forward to the answer to your question(s).

the hendrys



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Author: thehendrys Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 27305 of 75776
Subject: Re: death of IRA owner and distribution Date: 1/18/2001 1:45 PM
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From the Motley Fool IRAs Area...

As with a regular IRA, if your spouse is your Roth IRA beneficiary, and you happen to go to the great beyond, your spouse can treat your Roth IRA as his own. He can keep the Roth IRA intact. He will not have to "accelerate" the "spread out" income should you pass on. Your spouse will also not have to deal with any required distribution rules, and will have all of the normal rights and privileges that would accrue to a Roth IRA account. Short and sweet.

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Author: Crosenfield Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 27306 of 75776
Subject: Re: death of IRA owner and distribution Date: 1/18/2001 1:47 PM
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There is no such thing as a "joint" IRA. IRA means Individual Retirement Arrangement.
If the beneficiary is the spouse, the money passes tax free. If it is someone else, depending on the size of the estate the taxes can be horrendous. In some states I've seen horror stories of up to 96% of a multimillion dollar IRA going to federal income tax, estate tax, state tax. Not a pretty picture
The bottom line is that if you are in the "high net worth" category, it may well be wiser to be spending your IRA once you retire, and certainly by age 70 1/2, rather than living on money from taxable accounts!
Best wishes, Chris

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