Different financial instruments have different rules about what can be done with them. The same thing holds true when you inherit the instruments. If you inherit a Roth IRA, the rules are different than a traditional IRA and you need to know what you can do with it.
As Roth IRAs have different rules than traditional IRAs when they are created, it stands to reason that they have different rules regarding other attributes as well.
This presumption certainly holds true when it comes to how they are inherited. Consequently, before you can decide what to do with an inherited Roth IRA, you need to know what your options are.
Recently, the Wills, Trusts & Estates Prof Blog published an article titled “Options for Inherited Roth IRAs.”
Here is a list of the options identified in that article:
- Disinherit the IRA.
- Take a lump sum distribution.
- Roll it into another inherited Roth IRA.
- Roll the funds into your own Roth IRA. This last one is available only if you inherited the Roth IRA from a spouse.
Those are your options and you will want to read the original article for more details.
Of course, other rules exist about when you can take distributions. This, however, should give you a general idea so that you can start deciding what you might want to do.
Please contact our office today at 239-225-7911 to schedule an appointment with Barbara M. Pizzolato if you are interested in protecting your legacy and need to create or update your estate plan. You may also wish to attend one of our free seminars.
Reference: Wills, Trusts & Estates Prof Blog (March 15, 2015) “Options for Inherited Roth IRAs.”