Liquidating roth ira rules dating and marriage and how and long

Furthermore, the required distributions described above don’t apply to a Roth IRA you elect to treat as your own.You can leave the money in the IRA as long as you want.Often the best choice for the beneficiary is to delay withdrawing money as long as possible, retaining the benefit of building tax-free earnings in the Roth IRA.

As a result, a beneficiary may have to pay tax on earnings withdrawals if the original owner’s death and the beneficiary’s withdrawal both occur shortly after the Roth IRA is established.There is one way Roth IRAs provide an estate tax benefit. That means the size of your estate has been reduced by the amount of tax you paid on those dollars.The result is that you have a smaller taxable estate even though the value of what you’re passing to your beneficiaries may be as great or greater than if you had a traditional IRA.That’s okay though, because you’re not considered to have withdrawn any earnings until after you withdraw all the contributions (including conversion money).The required distributions under this rule are generally a small percentage of the overall value of the Roth IRA, so you aren’t likely to take any distributions of earnings within five years unless you withdraw more than the required amount.

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For a beneficiary other than a spouse, distributions must satisfy one of the following rules: The original owner may have specified which rule applies in the document used to set up the Roth IRA. If the choice is yours, you have to choose by December 31 of the year following the year the death occurred, because that’s the last day to start receiving distributions under Rule 2. In this case you can delay your distribution, if necessary, until the fifth year after the year the IRA was established, to avoid paying tax on distributions of earnings.

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