| One of the most attractive features of a Roth | | | | the spouse doesn't have to start the RMDs until |
| IRA is the ability to control the timing of the | | | | the IRA owner would have reached age 70 1/2. |
| eventual required distributions. However, this ability | | | | Here is another area where the spouse needs to |
| mandates the withdrawals to be made within a | | | | pay attention. If RMDs are not started when |
| prescribed set of rules. | | | | required (or less than the required amount is |
| The distribution advantages of a Roth IRA extend | | | | taken out), the penalty tax is a whopping 50% of |
| beyond the death of the IRA owner. But to | | | | the difference between what was required and |
| make sure the spouse and children can benefit, | | | | what was withdrawn. |
| things have to be set up properly. Here is a | | | | If your desire is to extend the RMDs all the way |
| summary of the Roth IRA distribution rules at | | | | to the death of your spouse, here is another |
| death. | | | | "heads up". Let's say you named a trust as the |
| Many people do not like the requirement that a | | | | beneficiary of your Roth IRA. Even if your spouse |
| traditional IRA must start required minimum | | | | is the sole beneficiary of the trust, the election to |
| distributions (RMDs) at age 70 1/2. Perhaps they | | | | have the spouse treat your Roth IRA as their |
| don't need the income yet. Maybe they would | | | | own cannot be made. There technically may be a |
| just as soon let the IRA continue to grow. In any | | | | work-around (a rollover), but why not just set |
| event, the RMDs are taxable. Depending on the | | | | things up right from the start? |
| circumstances, they may even make part of | | | | A Person Other Than Your Spouse is the |
| Social Security retirement benefits taxable. | | | | Beneficiary |
| RMDs during the life of the Roth IRA owner are | | | | In this case, distributions must be made over the |
| not required. If and when income is needed, | | | | remaining life expectancy of the beneficiary. If |
| withdrawals can be made, but there is no IRS | | | | there is more than one beneficiary, the life |
| requirement. | | | | expectancy of the oldest is used. If the |
| When the Roth IRA owner dies, RMDs must | | | | beneficiary is a trust with multiple beneficiaries, the |
| begin. When they are required to begin and how | | | | oldest beneficiary's life expectancy is also used. |
| the distributions are received is a function of | | | | Another caution: If an entity other than an |
| several factors. | | | | individual is a beneficiary of an IRA (even if an |
| Your Spouse is the Beneficiary | | | | individual is also a beneficiary), the IRA is treated |
| If your spouse is the sole beneficiary of your | | | | as having no beneficiary. The distribution |
| Roth IRA, your spouse can make an election to | | | | requirements for an IRA with no beneficiary are |
| be treated as the owner of your Roth IRA. In | | | | outlined below. |
| this case, RMDs can further be postponed until | | | | Probably the most common scenario involving a |
| the spouse's death. | | | | "non-person" is a charity. If you name a charity as |
| Note the word "sole" beneficiary, as this is an | | | | one of the beneficiaries, the distribution rules are |
| area where a mistake could inadvertently be | | | | different and may be contrary to your desires. |
| made. | | | | The solution is to roll part of your IRA over to a |
| For example, let's say you named your spouse | | | | new one and name the charity as the sole |
| and your children as beneficiaries. The spouse | | | | beneficiary. |
| would be prohibited from making the ownership | | | | No Beneficiary |
| election and RMDs would be required over the life | | | | Where no beneficiary is elected, the entire |
| expectancy of the spouse, thus reducing (the | | | | distribution must be made over five years. This |
| spouse could die before their expectancy) or | | | | five year rule would also apply even if there were |
| exhausting the Roth IRA balance altogether. So | | | | a beneficiary and the distributions were not |
| much for your desire to leave part to the children. | | | | started when the rules dictated they must start. |
| If the Roth IRA owner dies before age 70 1/2, | | | | |