Estate planning and your Roth IRA
A Roth IRA may be the most tax-efficient asset you can leave your heirs — it grows tax-free and passes to them generally income-tax-free. But the SECURE Act changed how it transfers, so beneficiary designations, conversions, and trust planning all need to be coordinated to capture the full benefit.
These are the questions that matter most when a Roth IRA is part of your estate.
Why is a Roth so valuable to leave behind?
A Roth IRA is funded with money you’ve already paid tax on, so it grows tax-free, never forces you to take withdrawals during your life, and passes to your heirs generally income-tax-free. That combination makes it one of the most valuable assets you can leave — especially to heirs who are in high tax brackets themselves.
During your life
Grows tax-free
No required withdrawals — the account can keep compounding, untaxed, for as long as you live.
At your death
Passes tax-free
Your heirs generally receive Roth withdrawals income-tax-free — the full value, not a reduced after-tax amount.
How did the SECURE Act change things?
The old “stretch,” which let heirs draw an inherited account over their whole lifetime, is largely gone. For most non-spouse heirs, the inherited Roth must now be emptied within 10 years. Because Roth withdrawals are tax-free, that’s more about timing than tax — but it means the account can’t compound forever.
Most non-spouse heirs
The 10-year rule
- The inherited Roth must be emptied within 10 years
- Withdrawals are generally tax-free, so timing is flexible
- The account stops compounding after that window
Eligible designated beneficiaries
Can still stretch
- A surviving spouse, minor children, or disabled heirs
- They can stretch over their life expectancy
- A spouse can roll it into their own Roth
What does it look like in practice?
Which asset you leave to which heir can make a real difference in what actually reaches the family.
Leaving the Roth carelessly
Value is left on the table
Bob and Peggy Caldwell hold both a traditional IRA and a Roth. If they leave the taxable traditional IRA to James, a high earner, he drains it within 10 years at top tax rates — while the tax-free Roth goes to a lower-bracket heir who benefits less from it.
Coordinating the beneficiaries
Each asset to the right heir
With planning, the tax-free Roth goes to James, whose high bracket makes tax-free growth most valuable, and the taxable accounts are steered to lower-bracket heirs or a trust. Same estate, far more after-tax value reaching the family.
The Caldwells are a composite example used to show how the planning works — not a real client. Roth and tax planning should be coordinated with your own tax professional.
Is my Roth plan optimized?
Five short choices. Brent reads your answer back to you at the end.
A 30-second guided quiz. Get a personal read on whether your Roth plan is set up well.
How Brent helps you
- Reviews your beneficiary designations against the current SECURE Act rules
- Helps steer the right assets to the right heirs for the most after-tax value
- Weighs whether a Roth conversion fits your and your heirs’ tax picture
- Drafts a see-through trust where an heir needs protection, coordinated with your CPA
