The Secure Act of 2019 eliminated many of the advantages the so-called stretch IRA offered heirs inheriting an individual retirement account, but a Roth IRA conversion can ease some of the pain.
Now, this inherited wealth can come with significantly more baggage, and affected heirs will typically feel its weight almost immediately. Most will likely withdraw one-tenth of the IRA's assets every year for 10 years to spread out the tax impact.
A Roth conversion might be a good option, not only to minimize heirs' tax burden but also to sustain the growth of your retirement nest egg.Roth conversions have long been the choice of considerate benefactors mindful that, in leaving heirs an IRA, they were passing along the annoyance of paying tax on the income they invested. Now that the rules have shrunk the stretch option, this inherited liability is far more than a mere annoyance. It's a "tax-ageddon.
Converting in a year when extremely high-deductible health-care expenses reduce your taxable income significantly. If you've had the misfortune of serious illness or injury and high uncovered medical expenses, you might as well use the resulting deductions to offset the tax impact of a Roth conversion.
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