How and Why To Use Roth IRAs in Estate Planning

November 11, 2021

With new tax proposals from Congress and potential changes to the estate tax exemption limit, Roth IRAs should be considered as a way to control a family’s estate tax exposure. One of their biggest advantages is that they do not have required minimum distributions which gives clients flexibility and control over when they take distributions. If the client does not need the funds, their Roth IRA can continue to grow and compound tax-free for their entire lifetime. When their non-spousal beneficiaries inherit the Roth IRA assets, they have ten years to distribute the funds and the distributions remain tax-free. In contrast, non-spousal beneficiaries of Traditional IRAs face substantial tax burdens when forced to distribute the funds within ten years which erodes the value of the inheritance.

At Brandywine Oak, we recognize the power of Roth IRAs for estate planning and guide our clients to maximize their after-tax returns for their lifetimes and their families. To learn more about this topic, please read ThinkAdvisor’s