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What happens to my Traditional or Roth IRA if I die?

We know — it’s not fun to talk about but hey, kudos to you for being prepared. Rest (peacefully) assured that your IRA benefits will be passed directly to your named beneficiaries (without being subject to the estate probate process) in the unfortunate event of your death.

We're here if you'd like to ask any specific questions. Call 847.576.5199 (toll-free at 877.270.6392).

Here are some specific Roth IRA terms to be aware of:

  • If you have designated a beneficiary, then distributions must start at least one year from the date of your death.
  • Annual distributions must be made in an amount not less than the Roth IRA account balance multiplied by a fraction, with 1 as the numerator and your beneficiary's life expectancy as the denominator.

A little complex, we know, but the IRS makes the rules. If you have not designated a beneficiary, distributions must be completed within five years. If your primary beneficiary is your spouse, they're given the added option of either assuming your Roth IRA or rolling it over to a Roth IRA in their name. The amount in your Roth IRA when you die may be subject to estate tax if your estate, including the remaining amount in the Roth IRA, is significant. Your tax advisor can help you determine what "significant" means.

When am I required to begin taking distributions from a Traditional IRA?

By April 1 of the year after you turn 70 1/2. Not kidding. It's that specific.

How much do I have to take out of my IRA at age 70 1/2?

You must start take the minimum distribution each year beginning with the year you turn 70 1/2. This minimum amount is calculated by dividing the IRA account balance as of December 31 of the prior year by the applicable distribution period or life expectancy.

The IRS does the math for you; just check out the tables in Appendix B of Publication 590 on their site.

  • Table I is used by beneficiaries.
  • Table II is for use by owners who have spouses who are both the IRA's sole beneficiary and who are more than 10 years younger than the owner.
  • Table III is for use by all other owners.