Roth IRA legacy
heirs could wait until the 10th year to deplete the account and enjoy nine years of tax-free growth.
But before leaving a Roth to your children, consider the consequences: You’ll have to pay taxes on any money you convert, and you can’t change your mind. So if you decide to convert some or all of the money in an IRA, make sure you can pay the tax bill.
You can’t roll over required minimum distributions to a Roth. If you’re required to take RMDs, you must take your annual withdrawal before you convert any money in your IRA to a Roth. You can’t take your RMD and then convert that amount to a Roth, says Ed Slott, founder of IRAHelp.com. For that reason, it’s usually a good idea to convert money from an IRA to a Roth before you have to start taking RMDs, Slott says.
The SECURE Act gives you a little more time to do that: Anyone who didn’t turn 70 1⁄ by the end of 2019 can
2 now delay taking RMDs from 401(k)s and traditional IRAs until the year they turn 72.
There’s no age limit on making contributions to a new Roth or one you already have, as long as you have earned income. If you’re retired and have a part-time job, for example, you could invest in a Roth. You can’t contribute more than you earned, so if you want to contribute the maximum — $7,000 for individuals age 50 and older — you must have at least that much in earnings. There are also income cutoffs for Roth IRAs.
The SECURE Act eliminated an age cap on contributions to traditional IRAs, so if you’re 70 1⁄ or older and have
2 earned income, you have that option, too. But if your goal is to leave the account to your children, the Roth is the better choice.
Sandra Block is a senior editor at Kiplinger’s Personal Finance magazine. Send your questions and comments to moneypower@kiplinger.com.