1. The lawyer handlng your estate should be able to tell the accountant how to handle it.I’m 68, wife is 64. Retired. Combined total in our 2 IRAs is 6.5 million. 5.3 in mine.
We are in the 37% marginal, so gradually converting to Roth hasn’t been in the cards.
RMDs would complicate my current rather simple tax and investment strategy.
Our estate exceeds the top estate limit markedly, so the IRAs would be taxed at 40% upon second deceased.
Tax credits would be passed to our children, but tax complexity and further record keeping for them would be a nightmare, and necessitate [1] CPA guidance for them vs their current simple filing.
[2] Does it make sense to cash out the IRAs and pay the 37% now? [3] Convert the remainder to a Roth? [4] Donate a large portion to my 2 charities [5] prior to sale?
2. No. If you have a $1 million IRA, over some period of time it will grow to $2 million. You or your beneficiaries will withdraw the $2 million, pay $740,000 tax, and have $1,260,000 after taxes. If you withdraw the $1 million, you'll pay $370,000 tax and you'll have $630,000 left. Over the same period of time, it will grow to something less than $1,260,000 since the income and gains on it will be taxed each year.
3. Perhaps, at least some. By paying the tax on the conversion out of other assets, you're effectively making an additional contribution to the IRA. If you're in a state that has a state estate tax, converting avoids the problem of the income tax deduction for the estate tax only covering the Federal, but not the state, estate tax.
4. Yes. If you have some that you don't convert, you'll be able to make some qualified charitable distributions from it once you reach age 70 1/2.
5. What sale?
Statistics: Posted by bsteiner — Fri Jul 19, 2024 1:04 pm — Replies 5 — Views 402