Using Retirement Accounts For Funding GiftsUsing Retirement Accounts For Funding Gifts
Roth conversions may help with wealth transfer planning.
For many families, tax-deferred retirement accounts provide a major source of wealth to be passed to later generations.1 Today, such accounts make up nearly one-third of total U.S. household financial wealth.2 And for good reason! Tax deferral may provide an investment benefit of nearly 70 basis points per year.3 Given this advantage, taxpayers have traditionally sought to extend the tax-deferral period for as long as possible.
However, with the benefits of tax deferral come significant planning complications for taxpayers subject to a potential estate tax liability. A taxpayer’s taxable estate includes the value of any retirement accounts held at death, even though an inheriting beneficiary may still owe income tax on the account funds. ...
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