Understanding Who Should Be Beneficiary of Your IRA
How to Turn a Modest Tax-Deferred Account Into Millions For Your Family
(includes IRAs, 401(k)s, pensions, profit sharing and other qualified plans)
21. What about a Roth IRA?
If you qualify, you may want to convert some or all of your tax-deferred money into a Roth IRA. You'll have to pay income taxes on the amount you convert, but special rules in 2010 can make the conversion more attractive. Also, if you qualify, you can make after-tax contributions to a Roth IRA.
Unlike a traditional IRA that requires you to start taking money out on April 1 after age 70 1/2, there are no minimum distributions required during your lifetime with a Roth IRA. And, generally, after five years or age 59 1/2 (whichever is later), all withdrawals are income tax-free. So you can leave your money there, growing tax-free, for as long as you wish.
You can stretch out a Roth IRA just like a regular IRA. After you die, distributions can be paid over the actual life expectancy of your beneficiary. Your spouse can even do a rollover and name a new beneficiary. And, remember, all distributions to your beneficiaries will be income tax-free.