Children Inherit $900,000 IRA Tax Bill as SECURE Act Forces 10-Year Payouts
Updated
Updated · Yahoo Finance · Aug 28
Children Inherit $900,000 IRA Tax Bill as SECURE Act Forces 10-Year Payouts
1 articles · Updated · Yahoo Finance · Aug 28
Summary
$900,000 in traditional IRAs left unconverted can saddle a couple's children with the largest tax hit, because inherited accounts must be drained within 10 years.
22% to 24% tax rates available to the parents on planned Roth conversions could become 32% to 35% rates for heirs taking forced distributions during peak earning years.
At age 72, the couple still has a window before required minimum distributions begin at 73 under SECURE 2.0, after which the IRA itself dictates annual taxable income.
Three factors drive the conversion decision: the surviving spouse's future bracket, the children's current tax rates, and whether non-IRA cash is available to pay conversion taxes.