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Level 3
posted Jul 15, 2020 6:03:36 AM

Best way to pass down IRA - convert now or not

Should mom convert her late husbands traditional $1M IRA, soon to be rolled into a traditional IRA in her name, into a Roth and pay tax on it now? She has her own pension and doesn't need it, it will eventually go to her 2 beneficiaries.  She hasn't used any of the lifetime exeption.  I expect taxes might be higher in the future....

So, convert now (2020) and pay taxes now or transfer as is to the beneficiaries and they pay the taxes when they get it - which would be better for passing wealth?

0 2 966
2 Replies
Expert Alumni
Jul 15, 2020 6:26:14 AM

This is a question for a financial advisor.

Level 15
Jul 15, 2020 8:28:09 AM

after converting $1M to a Roth all at once, there won't be much left after taxes.

Instead covert $50,000 per year, or other reasonable amount.

Note: If you (the children) inherit a Roth or Traditional IRA you must liquidate it all within ten years.