My understanding: For inherited Roth IRAs, the beneficiaries are compelled to empty the accont on a fully taxable as ordinary income basis within 10 years. If I was to pass on tomorrow my 40ish daughter would inherit and this would force a doubling of their family income for the next ten years, probably in their peak earning years. This seems like a dirty trick to play on the next generation, and for that reason I am considering gifting the entire Roth IRA to her, NOW. I would appreciate any comments on this reasoning. BTW, our assets have increased considerably in the last few years, so running out of retirement income is nearly impossible.
Comments
Thank you to commenters Perry, Clements and Oromode. All are informative and helpful.
Post: Roth While You Can
Link to comment from September 30, 2021
My understanding: For inherited Roth IRAs, the beneficiaries are compelled to empty the accont on a fully taxable as ordinary income basis within 10 years. If I was to pass on tomorrow my 40ish daughter would inherit and this would force a doubling of their family income for the next ten years, probably in their peak earning years. This seems like a dirty trick to play on the next generation, and for that reason I am considering gifting the entire Roth IRA to her, NOW. I would appreciate any comments on this reasoning. BTW, our assets have increased considerably in the last few years, so running out of retirement income is nearly impossible.
Post: Roth While You Can
Link to comment from September 30, 2021