Estate Planning Tip: Utilizing a Roth IRA to Stretch Out Tax Benefits

A Roth IRA offers distinctive retirement-savings benefits since under current law, investments in this type of account can grow tax-deferred and withdrawals are tax-free. It also gives you the ability to avoid early distribution penalties on some withdrawals. If you have a significant balance in your IRA and don’t plan to tap that balance during your lifetime, you may want to consider converting your IRA to a Roth IRA since it can benefit your estate. How? Well, the contributions made to a Roth IRA have the potential to grow larger than it otherwise might under traditional distribution rules, which means you’re leaving more for your loved ones. Another major benefit is that your beneficiaries can make income-tax-free withdrawals during their lifetimes. There are some benefits to this IRA strategy, but it is not fail safe. A potential drawback to a Roth IRA is that the ability to contribute to this type...