Craig Wear, CFP®Craig Wear, CFP® | Expert in Roth Conversions & Tax-Efficient Retirement Strategies for IRA Millionaires

How Roth Conversions Impact Your Heirs

2 Dec 2024 · 1 min

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Craig Wear, CFP® (speaker) discusses how Roth conversions affect heirs. He argues that while Roth conversions may not always produce enough personal tax savings to justify the conversion cost for the owner, they can make sense when the goal is to reduce heirs' future tax burdens. Key points in this excerpt: inherited retirement assets must be distributed within 10 years (the 10-year rule) and Roth conversions can, in some cases, reduce total taxes paid by heirs—potentially by "hundreds of thousands of dollars."

Questions this video answers

Within 10 years.

Potentially "hundreds of thousands of dollars" less tax in total.

Chapters

There still will be tax savings for you, but I don't think it's going to be enough to offset the cost of doing it. However, if you're really concerned about, gee, what am I going to leave for my kids and my heirs, whoever those are going to be, and what are the how are they going to deal with all this money sitting in a taxable account that they have to take RMDs from? They got to distribute it within 10 years. Anytime they need something, they got to pay taxes. If you're really trying to make sure that you don't, you're not going to leave them with just a mess and force taxation on them, then Roth conversions can make some sense, because the net benefit can still be hundreds of thousands of dollars of less taxes in total that everybody's going to pay on the deal.