Craig Wear explains how IRA owners with large balances face a hidden tax trap after death. Converting to a Roth before that happens can save the surviving spouse from jumping into a higher tax bracket and owing far more in taxes on inherited assets.
They had these large IRAs. They were IRA millionaires. They were working. They both had a lot of income. And fortunately, we had already begun to do Roth conversions by the time the unexpected happened, which is he passed. In talking to her, she was really grateful that once we understood what was happening after he had passed, they'd already started the transition from their IRAs to the Roths. And so the impact on her was going to be significantly less because now she had already moved most of the IRA money to a Roth, she shrunk down to a single taxpayer tax bracket, and she only had a little bit left that she had to take care of. This is actually one of the biggest hidden tax traps that we see. So much so that I've included it in a guide on IRA tax traps, which you can get for free by, through the link below.
