How Can a Roth IRA Benefit Illinois Residents?

Federal-Estate-Tax-Exemption-IMAGEA Roth IRA is an individual retirement account that offers tax savings in the future, but not up front. While a traditional IRA is basically a tax-deferred account funded by an individual’s pre-tax dollars, Roth IRA funds are after-tax monetary contributions that are not subject to additional taxation when withdrawn during retirement.

The Benefits of Including a Roth IRA in an Estate Plan

While estate plans can be designed to provide benefits during the life of the estate owner, they also outline what will occur after his or her death. Retirement accounts such as a 401(k) and a traditional IRA are taxable after the owner of such an account dies. One option to minimize the tax burden for your loved ones is to set up a Roth IRA. Only a qualified estate planning attorney knows the intricacies of how to properly include a Roth IRA in an estate plan and will explain the pros and cons carefully. If it is determined to be advantageous for your estate, having a Roth IRA can yield the following benefits:

  • Tax-free distributions for heirs
  • Ability to pass on more money to heirs
  • No minimum required distributions (MRDs) at retirement

Choosing the Right Retirement Mix

When it comes to making solid decisions about your retirement, you will want to enlist the help of an estate planning attorney and financial professionals. There are several types of retirement accounts to choose from and each has certain eligibility requirements and important considerations for future disbursements. The online version of the Ultimate Guide to Retirement, by Money Magazine has a wealth of information you can research to guide your decisions.

There are many options within a comprehensive estate plan to help secure a strong financial legacy for you and your loved ones. If you need to develop or create an estate plan, contact a respected Naperville, Illinois estate planning attorney today.