How to Use a Roth IRA to Avoid Paying Estate Taxes

https://www.rothira.com/blog/how-to-use-a-roth-ira-to-avoid-paying-estate-taxes 

 

You Can Inherit a Roth IRA

One of the greatest benefits of a Roth IRA, especially when compared to other investment assets such as a Traditional IRA or 401k retirement plan, is that a Roth IRA can be passed on to an heir when you die. There are no required minimum distributions with a Roth IRA. (Compare different retirement accounts and their minimum required distributions.) While this may not seem like a big deal to Roth IRA account holders, it can make a tremendous difference to your heirs.

Your heirs have the option of either rolling an inherited Roth into their own Roth IRA or cashing out the account without penalty regardless of their age. Typically, Roth IRAs that are inherited and not rolled into an account in the beneficiary’s name must be distributed within five years of the date of death or paid as an annuity over the beneficiary’s life. You can find out more information about Roth IRA distributions in IRS Publication 590-B.