D: Delay
Contributing to Roth IRAs and converting traditional IRAs into Roth IRAs can delay RMDs until after the death of the IRA owner. Designated Roth accounts [401(k) and 403(b)] are subject to RMD rules during lifetime. Rolling those amounts into Roth IRAs delays the need for RMDs until after the death of the Roth IRA owner.
Action plan: use Roth IRA to get tax-free growth
Roth IRAs are funded with after-tax contributions and qualified distributions (including earnings) from Roth IRAs are not subject to income taxation. Thus, the IRS has already received its money and has no reason to require distributions during the Roth IRA owner’s or spouse’s lifetime.
For those who may not need to withdraw funds from their Roth IRA for retirement living expenses, a Roth IRA may provide a significant opportunity to pass on a growing inheritance to named beneficiaries.