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Ep 22 - The Best Account to Inherit - Congress's Gift to Us
Welcome to the Good Steward Law and Wealth Podcast, hosted by Ledly Jennings. In this episode, we'll explore the complexities of Roth IRAs and inheritance, exploring how tax-free growth and strategic wealth transfer can benefit you and your loved ones. We’ll also break down key tax strategies, beneficiary rules, and estate planning considerations to help you maximize your financial legacy. Whether you are planning for retirement or looking to pass on wealth efficiently, this episode will provide expert insights to guide your decisions.
IN THIS EPISODE:
- [0:33] A review on the last two episode topics
- [2:49] Definition of a Roth IRA and why it converts to a tax-free inheritance
- [6:20] Rules on contributing to a Roth IRA and why everyone doesn’t use it
- [10:19] Does it make sense to convert to a Roth IRA
- [12:47] Discussion of tax rates and how they can impact beneficiaries
KEY TAKEAWAYS:
- Unlike traditional IRAs, which require beneficiaries to withdraw funds within 10 years and pay income tax on those withdrawals, a Roth IRA allows heirs to inherit tax-free funds. This means your loved ones can receive their inheritance without the burden of additional taxes, providing a sense of security and peace of mind. While it must still be emptied within 10 years, the money can continue growing tax-free during that period, further enhancing the financial security of your beneficiaries.
- A non-spouse must withdraw the entire balance within 10 years if it inherits a traditional IRA. This could push them into a higher tax bracket, significantly reducing the value of the inheritance due to income tax obligations.
- While there are income limits for direct Roth IRA contributions, high earners can still access Roth benefits through strategies like the backdoor Roth conversion or converting traditional IRAs to Roth accounts, provided they pay taxes upfront. Understanding and utilizing these options can empower you to benefit from tax-free growth and inheritance benefits, giving you more control over your financial future.
RESOURCES:
L. Jennings Law - Website
L. Jennings Law - Facebook
Ledly Jennings - LinkedIn
L. Jennings - Instagram
L. Jennings Law - YouTube
ABOUT THE HOST:
Attorney Ledly Jennings, founder of L. Jennings Law, specializes in protecting legacies and ensuring smooth transitions of personal and business assets. With offices in Arkansas, his firm offers expertise in estate planning, elder law, probate, and business planning. With a J.D. and MBA, plus valuable experience at Stephens, Inc., the state's largest investment bank, Ledly serves high-net-worth clients and family businesses statewide.
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By Ledly JenningsWelcome to the Good Steward Law and Wealth Podcast, hosted by Ledly Jennings. In this episode, we'll explore the complexities of Roth IRAs and inheritance, exploring how tax-free growth and strategic wealth transfer can benefit you and your loved ones. We’ll also break down key tax strategies, beneficiary rules, and estate planning considerations to help you maximize your financial legacy. Whether you are planning for retirement or looking to pass on wealth efficiently, this episode will provide expert insights to guide your decisions.
IN THIS EPISODE:
- [0:33] A review on the last two episode topics
- [2:49] Definition of a Roth IRA and why it converts to a tax-free inheritance
- [6:20] Rules on contributing to a Roth IRA and why everyone doesn’t use it
- [10:19] Does it make sense to convert to a Roth IRA
- [12:47] Discussion of tax rates and how they can impact beneficiaries
KEY TAKEAWAYS:
- Unlike traditional IRAs, which require beneficiaries to withdraw funds within 10 years and pay income tax on those withdrawals, a Roth IRA allows heirs to inherit tax-free funds. This means your loved ones can receive their inheritance without the burden of additional taxes, providing a sense of security and peace of mind. While it must still be emptied within 10 years, the money can continue growing tax-free during that period, further enhancing the financial security of your beneficiaries.
- A non-spouse must withdraw the entire balance within 10 years if it inherits a traditional IRA. This could push them into a higher tax bracket, significantly reducing the value of the inheritance due to income tax obligations.
- While there are income limits for direct Roth IRA contributions, high earners can still access Roth benefits through strategies like the backdoor Roth conversion or converting traditional IRAs to Roth accounts, provided they pay taxes upfront. Understanding and utilizing these options can empower you to benefit from tax-free growth and inheritance benefits, giving you more control over your financial future.
RESOURCES:
L. Jennings Law - Website
L. Jennings Law - Facebook
Ledly Jennings - LinkedIn
L. Jennings - Instagram
L. Jennings Law - YouTube
ABOUT THE HOST:
Attorney Ledly Jennings, founder of L. Jennings Law, specializes in protecting legacies and ensuring smooth transitions of personal and business assets. With offices in Arkansas, his firm offers expertise in estate planning, elder law, probate, and business planning. With a J.D. and MBA, plus valuable experience at Stephens, Inc., the state's largest investment bank, Ledly serves high-net-worth clients and family businesses statewide.