Planning Alternatives for Large IRA Owners
Hello –
A non-married client (age 74) has a large IRA and likely will not need the bulk of it during her lifetime. This client’s beneficiaries are her children who are in high tax brackets.
I would like to better understand the pro-active planning alternatives (Roth Conversion, Charitable Remainder Trust, etc) this client can do given the 10-year inherited IRA rule. The basic question is…which Ed Slott articles discuss this and/or what are the best resources to research these planning alternatives? Thank you.
Permalink Submitted by Bruce Steiner on Mon, 2021-05-31 02:27
Roth conversions provide various benefits. See my articles on this in the April 2013, https://www.kkwc.com/wp-content/uploads/2015/04/uf_Roth_Conversions_Are_More_Attractive_Under_ATRA.pdf, and June 2018, https://www.kkwc.com/wp-content/uploads/2018/08/Tax-Reform-Opens-Window-for-Roth-Conversations.pdf, issues of Trusts & Estates.
If the children (or grandchildren) are relatively young (but at least 27 or 28, depending on the month the IRA owner dies), are likely to need distributions, are unlikely to have taxable estates, are at low risk of creditors and spouses, and have other assets available for one-off needs, a charitable remainder trust may make sense since it replicates the stretch. See my article on this in the April 2020 issue of Trusts & Estates: https://www.kkwc.com/wp-content/uploads/2020/06/Charitable_remainder_trusts_replicate_the_stretch_-_Trusts__Estates_4_2020.pdf.