Basic Principles of Inherited Roth IRA that You Can Take Advantage of Today

Basic Principles of Inherited Roth IRA
that You Can Take Advantage of Today

Despite the fact that inherited Roth IRA is vulnerable to estate tax when money is shifted to beneficiaries,
this type of account is a good estate planning option. Account holders take care of income tax at the time
money is placed in the account and lessen inheritance tax for beneficiaries.

Inherited Roth IRA funds are only subject to estate tax if proceeds are greater than allowable exemptions.
It is always a good idea to talk with a tax accountant when establishing or bequeathing an individual
retirement account to ensure compliance with estate and inheritance tax guidelines.

Contributing funds to Roth IRAs is a good choice for individuals that would like to reduce taxes for
beneficiaries. Given that income tax is paid when contributions are made the accumulated funds are
exempt from taxes when money is withdrawn.

Beneficiaries can save a considerable amount when Roth IRAs have been established for long periods
since taxes are paid when contributions are made. In certain situations, tax savings could be as much as
ten-fold.

Another benefit of Roth IRAs is there is not a specified period when contributions have to be taken out.
With traditional IRAs account holders are required to withdraw money once they turn 70-1/2 years.

In addition, account holders can continue making contributions into their Roth account for as long as they
desire. This makes it possible for contributions to increase and supply additional funds to beneficiaries.

Roth IRAs are an exceptional way to setup inherited wealth for minor aged children. A good illustration
of this approach was presented by William Baldwin in Forbes magazine.

Essentially, minor aged children are permitted to contribute up to $5,000 annually into a Roth IRA.
Contributed funds must be earned through employment. However, other people can match contributions
up to the maximum amount of $5,000 per year.

WA 360- 527-2630 * CA 714 998-6888
Copyright (c) 2006 - 2012 www.SimonVolkov.com * All rights reserved

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Since Roth IRAs are classified as tax-sheltered retirement accounts, funds cannot be taken out until
account holders reach retirement. Contemplate the amount of money that can be set aside for children if
funds build up for 60 years or more.

Maximum annual contribution amounts are dependent on the age of the account holder at the time the
Roth IRA is opened. For people age 50 and younger, the maximum contribution amount is $5,000 per
year. For people over age 50, the maximum annual contribution amount is $6,000.

Individuals must meet certain eligibility requirements in order to open a Roth IRA. Rules apply to gross
income amounts that are computed according to marital status and method used when filing personal
income tax returns.

It is recommended to work with an experienced estate planner to ensure beneficiaries receive maximum
benefits from an inherited Roth IRA. Experts can provide methods for reducing inheritance tax and
implementing sound retirement planning techniques.
WA 360- 527-2630 * CA 714 998-6888
Copyright (c) 2006 - 2012 www.SimonVolkov.com * All rights reserved

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