Roth IRAs (individual retirement accounts) are increasingly popular in legacy planning because of their tax-free benefits on contributions and earnings and lack of required minimum distributions (RMDs) during the original owner’s lifetime. Your beneficiaries will continue to reap the benefit of tax-free withdrawals for years after they inherit the account. But only if they take withdrawals correctly and the Roth is passed down correctly.

This is what you need to know about Roth IRAs, passing along a Roth IRA to your heirs, and 10 reasons why it’s a good idea.

What is a Roth IRA?

A Roth IRA is one type of individual retirement account you contribute to with after-tax dollars. The main benefit of a Roth is that your investments grow tax-free. You can withdraw both your contributions and any earnings tax-free before you reach retirement age if you meet certain conditions — you must be at least 59-½ years old and have had the Roth account for at least five years. There are also income limitations to take into consideration.

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