Estate Planning

Unlike the Roth IRA, your money after death in a Traditional IRA is still fair game for the IRS. However, if your spouse inherits the amount, he or she can put it in their own Traditional IRA account without anything owed to the government. Your beneficiaries on the other hand are not so lucky. They get a choice: either receive the money in a lump sum in one year or receive it periodically over time. Each distribution then gets taxed when given to your beneficiary.

Conclusion

The Traditional IRA is one of a number of tools that can help you save for retirement. It has its pros and cons, and under certain circumstances can be very beneficial. Much of that benefit depends on your own planning, where you end up in financial status when retired, and how you plan your finances. Ultimately the money must begin to be distributed at some point and taxes will be owed on the amounts.