Livens & Reed, PLLC

Advice for those whose inheritance includes a Roth IRA

Retirement plans can have several different components. They not only take care of an account holder, but can be passed on to a family member or another individual after the account holder has passed on. Some of them include a retirement account known as a Roth IRA. When this type of retirement account is part of an inheritance, the beneficiary may have many questions about what to do with it. Fortunately, experts have several helpful suggestions for anyone here in Texas in this situation.

The SECURE Act, signed into law last year, made changes to the inheritance of an IRA. The accounts must be emptied within 10 years of the original account holder's death, unless an exception applies. For example, if the IRA is given to the account holder's spouse, or if the beneficiary is disabled or chronically ill, that rule doesn't apply.

If none of the exceptions are applicable, the beneficiary could move the assets into an inherited IRA account. Another option is for the beneficiary to decide the best way to withdraw on the account and use it to boost his or her own retirement savings. However, some beneficiaries will have their own retirement plans that they feel secure in, so the assets of the IRA could be used for other financial goals such as paying off debt or creating an emergency fund.

One of the best things to do in any circumstance is to consult professionals. A financial planner can advise a beneficiary based on his or her personal financial circumstances. The beneficiary may also want to consult an attorney here in Texas about the best way to proceed. The Roth IRA, or any form of an inheritance, can be implemented into an estate plan, which can bring peace of mind about the future.

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