IRA Problem: Income tax at death.
IRA Solution: Stretch, Charitable, Roth -- any one of them is vastly superior to leaving an IRA subject to income tax at death.
Don Prehn and Steve Savant have put together an informative video that examines each alternative. It’s in two parts with the first segment (seven minutes) discussing the three options and the second segment (six minutes) covering the Roth IRA in more detail.
The main takeaway from the Roth evaluation is this: The tax cost to convert to a Roth is not a cost at all; it is an investment that produces a terrific return both for your clients and their heirs.
Click on the image below to begin the video.
One thing I hope you didn’t miss near the end of the first video segment is Don’s discussion of the value of an Inherited Roth IRA. While there are plenty of reasons discussed in both segments as to why a Roth conversion is valuable, the gain to the heirs in after tax cash flow of more than $17 million from the Inherited Roth is extraordinary:
- $ 3,671,890 total after tax cash flow from the Inherited IRA.
- $ 20,967,997 total after tax cash flow from an Inherited Roth IRA.
That’s a 571% increase. Hard to believe? Click here to review the Inherited IRA vs. Inherited Roth IRA comparison Illustrations from the InsMark Illustration System.
For a more detailed analysis of the Roth alternative, go to Blog #81: Economics of a Roth IRA.
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