Although majority of the $5.3 trillion (and growing) in assets currently held in individual retirement accounts will be spent by retirees to support themselves in retirement, a significant portion will also be left to heirs. Forbes has written an article with tips regarding how to ensure that the tax advantages of IRAs extend as long as possible to provide the maximum potential tax advantages for those who will inherit them.
The more notable tips include:
- Making only the required minimum distribution, in order to stretch out the period during which the money can grow tax-deferred.
- Leaving IRA assets to younger heirs, thereby lowering the annual required minimum distribution and thus maximizing the stretch described above.
- Rolling it into a surviving spouse’s own IRA, as long as they won’t need to take distributions before age 59 1/2.
- Consider converting a traditional IRA to a Roth where beneficiaries live in a state with high state income tax rates.
For the entire list, see “13 Tips To Make An IRA Last Longer,” Forbes.com.
Posted by Conan Yuzna, Associate Editor, Wealth Strategies Journal.