A:

Under the current version of the law, any IRA or Roth IRA assets that are gifted while the IRA owner is alive are considered to be a distribution from the IRA to the IRA owner. This means the assets will no longer be considered IRA assets after they leave the IRA.

Some IRA owners choose to designate the giftee (the party receiving the assets) as a beneficiary of the IRA so the party will receive the assets after the Roth IRA owner dies. This allows the beneficiary to maintain the assets as IRA assets for a certain period as allowed by the law. For a Roth IRA, this period may be the five years after the death of the Roth IRA owner or the single life expectancy of the beneficiary. However, this option would not allow your mother the tax-free gift benefit she is allowed for the $11,000.

This question was answered by Denise Appleby
(
Contact Denise)

Hot Definitions
  1. Return On Equity - ROE

    The amount of net income returned as a percentage of shareholders equity. Return on equity measures a corporation's profitability ...
  2. Bond

    A bond is a fixed income investment in which an investor loans money to an entity (corporate or governmental) that borrows ...
  3. Whole Life Insurance Policy

    A life insurance contract with level premiums that has both an insurance and an investment component. The insurance component ...
  4. Compound Annual Growth Rate - CAGR

    The Compound Annual Growth Rate (CAGR) is the mean annual growth rate of an investment over a specified period of time longer ...
  5. Capital Asset Pricing Model - CAPM

    A model that describes the relationship between risk and expected return and that is used in the pricing of risky securities. ...
  6. Internal Rate Of Return - IRR

    A metric used in capital budgeting measuring the profitability of potential investments.
Trading Center