Thank you for your question. It seems as though you might have a bit of confusion on Roth IRA accounts so I’m glad you asked.
All IRA accounts (Roth, Traditional, SEP, and SIMPLE) have to be established only in the name of a single individual. But that won’t interfere with what sounds like your desire to have your wife take ownership of the account at your passing – and you don’t have to use a Transfer On Death (TOD) designation to make it happen. Instead, all IRA accounts offer the account owner the ability to designate a beneficiary of the account. So in your case, you would simply need to make sure your wife is listed as the beneficiary of your Roth.
As for the tax implications of naming her as the beneficiary – there aren’t any at the time you set up the designation. Taxes only become an issue with IRAs when funds are withdrawn; and with a Roth IRA, she will have the opportunity to avoid taxes altogether just as you would. For more information on her options for handling the account at your passing (and the associated tax implications), I encourage you to review the Roth IRA section of IRS Publication 590
under the heading “Distributions After Owner’s Death.” This particular section outlines the options available to Roth IRA beneficiaries.
Finally, while this should give you a general understanding of the beneficiary aspects of Roth IRAs, it is typically best to speak with a qualified tax advisor who is knowledgeable about your situation regarding questions of this nature. Sometimes these issues can get a bit complicated and you don’t want to make a mistake today and pay for it later.
Thanks again for your question and best of luck to you!
answered 4 years, 1 month ago