A Roth IRA is an individual retirement account (IRA) that is funded with money on which income taxes have been paid—but distributions may be taken without paying income tax (tax free) if certain conditions are met—for example if you are at least 59 ½ years old when you begin taking distributions and have had a Roth IRA account for at least five years.

There are no required minimum distributions (RMDs) in the original Roth IRA account owner’s lifetime. And the original Roth IRA account owner can provide their heirs with years of tax-free income (distributions) by properly designating a beneficiary or using the proper trust (a conduit trust) that takes out the required minimum distributions each year.

Because of the complexity, pitfalls, and laws that are constantly evolving, a Roth IRA account owner who wants to leave this asset to heirs should consult with a legal or financial professional who is familiar with the rules.

In Maine, as in all states, Roth IRAs are governed by federal law, not state statutes. Roth IRAs are retirement accounts that are funded with after-tax dollars, meaning the contributions are not tax-deductible. However, the distributions, including earnings, are tax-free if certain conditions are met, such as the account being at least five years old and the account owner being 59 1/2 years of age or older. Unlike traditional IRAs, Roth IRAs do not require the owner to take required minimum distributions (RMDs) during their lifetime, allowing the funds to potentially grow tax-free for a longer period. Upon the owner's death, beneficiaries can inherit the Roth IRA and may be able to take distributions tax-free. The use of a conduit trust can help manage the distribution of the Roth IRA to beneficiaries while maintaining the tax advantages. Due to the intricacies of Roth IRA regulations and the potential for tax law changes, it is advisable for account owners in Maine to consult with an attorney or financial advisor who is knowledgeable about Roth IRA rules to ensure proper estate planning and beneficiary designation.