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 North Dakota, as in all states, a Roth IRA is a retirement savings account that allows for tax-free distributions under certain conditions. Contributions to a Roth IRA are made with after-tax dollars, meaning the contributions are not tax-deductible. However, the account grows tax-free, and qualified distributions—typically after the account holder reaches 59 ½ years of age and has held the account for at least five years—are also tax-free. Unlike traditional IRAs, Roth IRAs do not require the account owner to take required minimum distributions (RMDs) during their lifetime, allowing the funds to potentially grow tax-free for a longer period. Upon the account owner's death, beneficiaries can inherit the Roth IRA and may be able to take distributions tax-free, provided certain conditions are met. It is important for Roth IRA owners in North Dakota to designate beneficiaries and consider the use of trusts, such as a conduit trust, to manage the inheritance of their IRA in a tax-efficient manner. Due to the intricacies of estate planning and tax laws, which are subject to change, it is advisable for individuals to consult with an attorney or financial advisor who is knowledgeable about the current regulations to ensure their Roth IRA is structured properly for estate planning purposes.