We talk a lot about the benefits of Roth accounts. A Roth IRA allows you to save for retirement with after-tax dollars. That means you pay taxes on your contributions now, but your withdrawals are tax free in retirement.
There are also several benefits to inheriting a Roth IRA, as Peter with Richon Planning explains to Erin Kennedy; the distributions are tax-free, and they won’t affect your taxable income. However, with a few exceptions, you’ll still have to drain the inherited account within 10 years.
If you are inheriting a Roth IRA, here’s a quick action plan:
1. Understand your beneficiary type (this will determine your distribution options)
2. Consider your tax situation
3. Invest the money wisely
4. Get professional help
