He Spent Down the Roth First to ‘Save’ the IRA for His Kids. He Left Them a $120,000 Tax Bill Instead of a Tax-Free Account

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Spending down a Roth first leaves heirs with a traditional IRA they must fully withdraw within 10 years, taxed as ordinary income.

A $500,000 traditional IRA split between two children earning $100,000 each pushes distributions into the 24% bracket, creating a $120,000 tax bill.

Retirees should use the low-income gap between retirement and age 73 to do Roth conversions at 10% to 12% rates instead of spending the Roth.

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