Because Roth IRAs do not require you to take minimum distributions, you can leave every single penny of your Roth IRA intact for your designated beneficiary. That’s great.
Even better is the fact that your heir will face a choice upon your death: Either withdraw the whole amount by December 31 of the fifth year after your death OR begin receiving minimum distributions based on his or her life expectancy.
Under either choice, all the proceeds should be tax-free (with the exception of estate taxes).
Think about what would happen if you loaded up that Roth IRA with stocks that steadily increase their dividends. And imagine what would happen if you were reinvesting those dividends back into more shares!
You’d be combining complete tax efficiency with multiple layers of compounding interest. Heck, with enough time, you could leave behind a nest egg that was rising faster than the rate of your heir’s mandatory withdrawals!
InvestingInDividends.com
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