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 Nebraska, as in all states, a Roth IRA is governed by federal tax laws. 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 owner being 59 1/2 years of age 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, estate planning strategies, such as designating a beneficiary or setting up a conduit trust, should be carefully considered to ensure that the Roth IRA's benefits are fully utilized and to avoid potential pitfalls. Due to the intricacies of estate planning and tax laws, which are subject to change, it is advisable for Roth IRA owners in Nebraska to consult with an attorney or financial advisor who is knowledgeable about the current regulations to ensure proper planning for the inheritance of their Roth IRA assets.