Kiplinger recently quoted Jesse Giordano, CFP®, CAP®, RLP®, CBEC®, Managing Partner and Founder of Opal Wealth Advisors, in the article “We Have $4 Million in IRAs. Does Our Inheritance Strategy Make Sense?” The article examines how families with significant retirement savings can approach inheritance planning while navigating Roth conversions, beneficiary designations, and the potential tax implications of transferring wealth to future generations.
The discussion centers on a couple in their 80s with $4 million across traditional and Roth IRAs who want to leave assets to their children, grandchildren, and charitable causes. While the couple has developed a strategy to manage taxes for their heirs, Jesse explains why evaluating its effectiveness requires looking at the broader financial picture, including current and future tax rates, Medicare surcharges, and how inherited retirement accounts are distributed.
“I’d start by comparing the couple’s all-in marginal rate … with what the heirs might pay drawing down an inherited IRA over 10 years.”
As Jesse explains, traditional IRA assets and Roth accounts can have very different tax implications depending on who inherits them. For example, leaving traditional IRA assets to charitable organizations or beneficiaries in lower tax brackets, while preserving Roth assets for heirs facing higher tax rates, may create a more tax-efficient outcome.
Jesse also highlights the importance of evaluating Roth conversions within the context of both spouses’ lifetimes, particularly as tax brackets and Medicare premium thresholds can change following the death of a spouse. These considerations demonstrate why an inheritance strategy that appears effective today may need to be adjusted as family circumstances evolve.
Jesse’s perspective reflects Opal Wealth Advisors’ comprehensive approach to financial planning, where tax planning, retirement income, and estate and legacy decisions are considered together. Rather than viewing each decision in isolation, understanding how they affect one another can help families make more informed choices about preserving and passing on their wealth.
Read the full article: We Have $4 Million in IRAs. Does Our Inheritance Strategy Make Sense? by Maurie Backman