Roth IRA Beneficiary Options
Do you have plans for your money upon your death? Do you have beneficiaries in mind to inherit your money in the event of your passing? If not, this is something you need to think about. You want to be sure your family is taken care of when you are not around.
Beneficiaries of qualified accounts are considered to be either “designated” or not. A designated beneficiary is a living person for whom a life expectancy can be calculated. A non designated beneficiary is anyone else. This is critical is determining how the money is paid out on the account.
A designated beneficiary can be your spouse or anyone else.
The account owner’s spouse is usually the beneficiary of accounts. As a beneficiary the spouse has four options allowed by the IRS. They can choose to leave the money in the account, they can take the lump sum as a distribution, take an annuitized distribution based on their life expectancy, or they can roll the money over into their own Roth IRA account.
A non-spousal beneficiary could be children, grandchildren, nieces or nephews, or any other living person chosen by the account holder. These beneficiaries have three distribution options allowed by the IRS. They can leave the money in the account, they can take a lump sum distribution, or they can take an annuitized distribution based on their life expectancy. A non spousal beneficiary can not roll the account into an account of their own.
You choose what to do with your money now, make sure you have a plan to take care of your family in the event of your death.