Many financial planning clients have substantial IRAs, yet they have no need to tap the account for retirement income. Generally, they’ll take only required minimum distributions (RMDs) after age 70-1/2, to reduce the tax bill on unneeded income. This approach may result in a sizable traditional IRA being passed down to the next generation, who also must take RMDs.

“Often, our clients’ children are doing very well financially,” says Marjorie Fox, co-founder of FJY Financial, an investment management and planning firm in Reston, Va. “The income from the inherited RMDs would be added to the children’s other income, and might be taxed heavily.”

Register or login for access to this item and much more

All Bank Investment Consultant content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access