A short YouTube video by Craig Wear, CFP® warning that very large IRAs create ongoing tax liabilities: required minimum distributions (RMDs) will generate taxable income for the account owner and spouse during their lifetimes, and beneficiaries face taxes when inheriting IRAs—particularly due to the 10-year distribution rule which can increase taxes if distributions are delayed. The speaker urges proactive mitigation.
So if you're an IRA millionaire, here's a few reasons why you're going to be the IRS customer, best customer for the rest of your life. Number one, your large IRA is going to create a constant stream of taxes for the US treasury for your lifetime and for your spouse's lifetime through those required minimum distributions. And the large IRA is also going to create a tax to your heirs. Now, they don't they maybe won't have an estate tax, but when they receive that IRA, they've got to start taking it, making distributions within 10 years. So the longer they wait to take the distributions, the higher the tax, the higher the balance is, and so the higher the tax is going to go. Also, look, unless you really do something about the problem now, you're not going to be able to do much to mitigate it later.
