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Retirement Planning
Important Points About
Required Death Distributions
On this page we will cover:
When a Roth
IRA owner names any person or entity...
Specific for
Spouse IRA Beneficiary
When a
Roth IRA owner names any person or entity...
however, avoiding probate does not mean
the Roth IRA necessarily avoids estate taxes.
The value of a decedent's Roth IRA is
included in the estate for estate tax purposes.
However, any Roth IRA assets for which
a surviving spouse or charitable organization are the beneficiaries
will be eligible for exclusion from the taxable estate.
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Distributions from the decedent's Roth IRA are not subject to the
10% premature distribution penalty, even if the spouse or non-spouse
beneficiary has not turned age 59½, but may be subject to ordinary
income taxes.
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If the beneficiary decides to change the institution where the
decedent's IRA account is being held, a direct transfer can occur to
move the decedent's IRA from one institution to another, as long as
the new institution accepts it.
The Roth IRA at the new institution may
remain in the name of the decedent, for the benefit of the IRA
beneficiary. This transfer is not, by itself, a taxable event.
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If the spouse is the sole primary IRA beneficiary, the Roth IRA will
avoid federal estate taxes because it qualifies for the unlimited
marital deduction.
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The surviving spouse only has the option to roll the Roth IRA into
his or her name alone if he or she is the sole primary beneficiary.
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