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A couple in their 80s with $3 million in traditional IRAs and $1 million in Roth IRAs asked whether their plan to divide their inheritance among charities, children and grandchildren would work. Two advisers cited by Kiplinger said the approach could make sense, but recommended weighing heirs’ tax brackets, reconsidering how Roth accounts are spent and exploring charitable distributions during the couple’s lifetimes.
A couple in their 80s with $3 million in traditional IRAs and $1 million in Roth IRAs is considering a plan to leave 10% of its wealth to charity, 60% to adult children and 30% to grandchildren. In a Kiplinger report, two financial advisers said the broad approach may work, but the right mix of Roth conversions, account beneficiaries and withdrawals depends on the heirs’ tax situations and the couple’s full financial picture.
The couple said it is converting traditional IRA funds to Roth accounts up to the 24% tax bracket, partly to manage future taxes and Medicare income-related monthly adjustment amounts, or IRMAA. It plans to use Roth funds to pay taxes on traditional IRA withdrawals during heirs’ 10-year withdrawal period. Adult children could use inherited traditional IRA distributions for gifts if they do not need the money, while keeping inherited Roth funds invested; grandchildren could use Roth withdrawals for taxes or leave the accounts invested.
Jesse Giordano, co-founder and managing partner at Opal Wealth Advisors, told Kiplinger that the couple could compare its own all-in marginal tax rate with the rates heirs might face as they withdraw inherited traditional IRA money. He described converting until those rates meet as one possible target, not a universal rule. Paul Pradel, a wealth manager and partner at Merit Financial Advisors, said conversions may be less attractive if the children are in lower tax brackets, and potentially more useful if heirs face higher rates.
Giordano also cautioned against letting IRMAA alone dictate the decision. He estimated that required minimum distributions from $3 million in IRAs could be around $190,000, potentially exposing the couple to Medicare surcharges already. That is an adviser’s estimate, not a confirmed calculation for this couple; the actual amount would depend on account and personal details.
The decision can affect how much of the inheritance remains available to heirs after taxes. Traditional IRA withdrawals are generally taxable to beneficiaries, while qualified withdrawals from inherited Roth IRAs are generally tax-free. A conversion moves taxes forward: the account owner pays tax on converted funds, potentially reducing the tax burden later, but whether that trade is beneficial depends on the rates and circumstances of both generations.
How the accounts are assigned may matter as much as the overall percentages. Giordano suggested that traditional IRA assets could be directed first to charity and then to heirs in lower tax brackets, while Roth assets might better suit higher-bracket heirs or certain trusts. He cautioned that trusts can reach the highest tax bracket quickly, and that a grandchild’s tax treatment may be affected by the kiddie tax. These are planning considerations, not a specific distribution recommendation for a family whose details are not known.
Giordano also advised against using inherited Roth funds early to cover taxes on traditional IRA withdrawals when it can be avoided. Inherited Roth IRAs generally have no annual required minimum distributions for most non-spouse beneficiaries during the 10-year period, so leaving funds invested may allow more time for tax-free growth. The applicable rules can vary by beneficiary and account circumstances.
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The Couple’s Proposed Distribution Plan
The letter to Kiplinger’s “Wealth Wise” column describes a couple seeking to allocate its reported $4 million in IRA assets among gifts, children and grandchildren. It does not specify the number of beneficiaries, the couple’s other income, the ages or tax brackets of the heirs, or whether “gifts” means donations to eligible charities. Those details could change the tax analysis and the practical way to divide accounts.
Pradel said qualified charitable distributions, or QCDs, may be worth considering if the intended recipients are eligible charities. A QCD can allow an IRA owner who meets applicable requirements to make a charitable transfer directly from an IRA, potentially reducing taxable IRA distributions. The report gives a 2026 QCD limit of $111,000 per individual, or up to $222,000 for a married couple if both qualify and have IRAs. The report does not establish whether the couple qualifies or whether this limit applies to its own plan.
The advisers also pointed to a possible change after one spouse dies: Giordano said the surviving spouse generally files as a single taxpayer beginning the following year, with tax brackets and IRMAA thresholds that are cut in half. That may make the timing of conversions relevant, but the couple’s expected income and filing circumstances are not provided.
““IRMAA is a cost to manage, for sure, but it probably shouldn’t drive the decision on its own.””
— Jesse Giordano, as quoted by Kiplinger
Key Family and Tax Details Are Missing
The report does not give the couple’s other income, deductions, state of residence, number of children or grandchildren, or the beneficiaries’ tax brackets. It also does not clarify whether the planned 10% for “gifts” means donations to eligible charities, nor whether any trusts are involved. Without those facts, the advisers’ comments cannot establish whether the couple’s conversion pace or proposed percentages are tax-efficient for this family.
The estimated $190,000 in required minimum distributions is an adviser’s projection, not a verified figure based on a complete financial profile. Tax law and Medicare thresholds may also change. Giordano cautioned that current tax rates are set under existing law but could be changed by Congress, so future rules are not guaranteed.
Review Conversions and Beneficiary Designations
The couple’s next step, based on the issues raised in the report, would be to review the proposed conversions and account assignments with a qualified tax or financial professional using its complete income, beneficiary and account information. That review could compare the tax cost of conversions with the likely tax treatment of heirs’ withdrawals, account by account, and test whether charitable giving during the couple’s lifetimes fits their goals.
It should also check beneficiary designations and the rules that apply to each heir, including any trust arrangements, before relying on a 10-year withdrawal plan. The report does not say whether the couple has taken those steps or identify a final decision. Any conclusion about whether the strategy will work remains dependent on their circumstances and the tax rules in force when transfers and withdrawals occur.
Key Questions
Is the couple’s inheritance strategy confirmed to be tax-efficient?
No. The advisers quoted by Kiplinger said the plan has potential, but its effectiveness depends on information not provided, including the couple’s income and heirs’ tax brackets.
Should the couple keep converting traditional IRA funds to Roth accounts?
The report does not give a definitive answer. Giordano recommended comparing the couple’s tax rate with the rates heirs may face, while Pradel said lower-bracket children could make conversions less attractive.
Should heirs use inherited Roth money to pay taxes on traditional IRA withdrawals?
Giordano advised against spending inherited Roth funds early when avoidable, because eligible inherited Roth accounts generally do not require annual distributions during the 10-year period. Rules can vary with the beneficiary and account.
Could the couple give to charity through its IRAs while alive?
Pradel said qualified charitable distributions may be an option if the couple and recipient charities meet the applicable rules. The report cites a 2026 limit of $111,000 per individual, but does not establish the couple’s eligibility.
Source: kiplinger.com
