Planning for future RMD’s and taxes
We have a prospect with 3million in an IRA account. He is currently 60. Projecting out his potential future RMD’s show they could be significant, with a lot of that going to taxes. Are there any strategies that make sense that could be taken today, that would reduce future RMD’s or potential taxes?
Permalink Submitted by Al Fry on Thu, 2008-04-24 21:39
Ed Slott’s IRA-max concept. Use IRA distributions to purchese Life Insurance in an ILIT.
Permalink Submitted by Bruce Steiner on Mon, 2008-04-28 01:44
The goal is not to minimize taxes, but rather to maximize the net amount after taxes.
A Roth conversion will eliminate required distributions during lifetime. If he has sufficient non-IRA assets with which to pay the income tax on the conversion, the conversion is likely to be beneficial.
Making gifts will reduce the estate, and hence the estate taxes.
Whether the donees (whether individuals or a trust or trusts) are better off investing the gifts in life insurance or other assets turns on how long the IRA owner lives, as well as how well the investments perform. If the IRA owner dies substantially before life expectancy, then the donees will do better investing the gifts in life insurance.