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 Iowa, 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 ½ years or older. Unlike traditional IRAs, Roth IRAs do not require minimum distributions during the lifetime of the original owner, allowing the assets 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. It is important to properly designate a beneficiary or set up a trust, such as a conduit trust, to manage the distributions to heirs. Due to the complexity and the potential for tax laws to change, it is advisable for Roth IRA owners in Iowa to consult with an attorney or financial advisor who is knowledgeable about current regulations to ensure their estate planning goals are met and to maximize the benefits for their heirs.