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Roth IRA beneficiaries: It’s a matter of trust

by on
in Leaders & Managers,Management Training

This may be the year you finally convert your traditional IRA to a Roth. But who should you name as the beneficiaries? Usually, it’s the kids or grandkids.

Strategy: Designate a trust as beneficiary instead. This way, you don’t have to worry about teenagers squandering the funds from an inheritance. The youngsters can gain full access to the funds at a specified age.

A trust arrangement is particularly beneficial for a Roth IRA because you can stretch out payments even longer than you can with a traditional IRA.

This is because there’s no requirement to begin taking annual distributions after reaching age 70½. So, if you don’t need the money, you can keep the Roth IRA nest egg intact for your heirs.

Here’s a quick recap: Unlike a traditional IRA, “qualified distributions” from a Roth—for example, distributions made after age 59½—in existence five years are completely tax-free. That creates an incentive to convert a tradition...(register to read more)

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