June 22, 2007, Newsletter Issue #52: A Non-Spouse Beneficiary

Tip of the Week

Having a Roth Individual Retirement Account (IRA) has distinct advantages to your spouse if he or she is your sole beneficiary. However, if a non-spouse is the beneficiary, he or she must take the Roth IRA distributions in one of two ways. - They must be taken in a lump sum by the end of the year which is the fifth anniversary of your death. - They must be taken in amounts determined by his or her life expectancy, according to government tables. This distribution would begin no later than December 31 of the year following your death. However, since those distributions would be treated as contributions first, it is likely that if most of the distributions were made before the end of the five-tax-year period they would not be subject to tax.

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