IRA Legacy Planning

Incorporating your IRA into your estate plan allows you to leave a financial legacy that reflects your intentions. We’ll guide you through the complexities of IRA inheritance rules, tax implications, and evolving legislation to help ensure your assets are transferred efficiently and in alignment with your long-term goals.

Inherited IRA questions

What is the 10-year rule for inherited IRAs?

For most non-spouse beneficiaries who inherit an IRA from someone who died after 2019, the account must be fully withdrawn by the end of the tenth year after the year of death. If the original owner died on or after the date their required distributions had to begin, annual withdrawals may also be required during those ten years. Spouses, minor children of the owner and certain other beneficiaries follow different rules.

Is a Roth IRA better to leave to my heirs than a traditional IRA?

It can be, but not always. Qualified Roth withdrawals are generally tax-free to beneficiaries, while traditional IRA withdrawals are generally taxed as ordinary income. Converting to a Roth means paying tax now, so it tends to make more sense when your tax rate today is lower than your heirs’ future rate. Our article The Tax-Efficient Inheritance walks through a hypothetical example.

How often should I review my IRA beneficiaries?

Review them after any major life event, such as a marriage, divorce, birth or death in the family, and every few years otherwise. Beneficiary designations generally control who receives the account regardless of what your will says, so an outdated form can send money somewhere you did not intend.

Should I name a trust as my IRA beneficiary?

A trust can add control, for example when beneficiaries are minors or need help managing money. Trusts must be drafted carefully to work with inherited IRA rules, though, and can add tax complexity. This is a decision to make with your estate attorney. We help coordinate the financial side so the account and the documents work together.

These answers are general education, not individual tax, legal or investment advice. Your situation may differ, so please talk with us or a qualified professional before acting.

Where legacy planning connects

Legacy planning overlaps with tax planning and, for families who give, with charitable gifts. The rules changed for inherited accounts and they catch people out. Ask us where you stand.