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 Wyoming, as in all states, a Roth IRA is governed by federal tax law. Contributions to a Roth IRA are made with after-tax dollars, meaning the money has already been subject to income tax. Qualified distributions from a Roth IRA, including earnings, are tax-free provided certain conditions are met, such as the account being at least five years old and the account holder being 59 ½ years or older. Unlike traditional IRAs, Roth IRAs do not require minimum distributions during the lifetime of the original owner, allowing the funds to potentially grow tax-free for a longer period. Upon the death of the account owner, beneficiaries can inherit the Roth IRA and may be able to take distributions tax-free. However, non-spouse beneficiaries are required to take distributions over a 10-year period due to the SECURE Act passed in 2019. To ensure that a Roth IRA is passed on to heirs with the intended tax advantages, it is advisable to consult with an attorney who is knowledgeable about estate planning and the latest tax laws to navigate the complexities and avoid potential pitfalls.