News and Commentary

UPDATED Rethinking Inherited IRAs After the SECURE Act by Lee F. Hediger

The SECURE Act’s elimination of stretch IRAs poses a challenge to many high-net worth account owners who had hoped to pass their savings to the next generation and allow inheritances to continue growing tax-free over beneficiaries’ lifetimes.

Under the law, non-spouse IRA beneficiaries must withdraw the entirety of inherited IRA accounts within 10 years of the original owner’s death and pay the taxes due. Without the ability to spread out distributions beyond ten years, beneficiaries of sizable IRAs may be pushed into higher tax brackets and liable for significantly higher tax bills. To help prevent this scenario and allow account owners to leave behind the lasting legacies they intended, it is important to review existing estate plans now and consider several alternative strategies.

Roth IRA Conversions

If you have been contributing pre-tax dollars to a traditional IRA, you may be able to convert that money into a Roth IRA, which allows you to take tax-free distributions before and during your retirement and your named beneficiaries to take tax-free distributions from those inherited accounts after you pass away. While these Roth conversions make perfect sense in the current environment of historically low interest rates, account owners should recognize that they will likely lead to an immediate tax liability on the converted amount.

Donate IRA Assets to Charity

Investors have many options to support their favorite charities and preserve their philanthropic legacies long after they have passed away. They may reduce the size of their IRA accounts and the future tax liabilities they pass to heirs by donating annual required minimum distributions (RMDs) to qualified charities after they reach age 72. Alternatively, they may name a charity as the beneficiary of their IRAs, or they may create a charitable remainder trust (CRT) or charitable lead trust (CLT) to receive IRA assets without incurring tax liabilities. When you pass away with a CRT in which your heirs are named beneficiaries, your IRA assets will pass to the CRT which can them make distributions to heirs over a period of more than 10 years.

Buy a Cash-Value Life Insurance Policy

 Depending on your age and the value of your estate, you may take early withdrawals from your IRA (and pay income tax on those amounts) to purchase life insurance for the benefit of your heirs. While you are alive, policy premium payments will spend down the value of your IRA account while increasing the cash value of the policy itself. When you pass away, your beneficiaries will receive a lump-sum, tax-free death benefit that had the potential to be larger than your IRA balance.

Divide IRA Assets Strategically Among Several Beneficiaries

Rather than leaving all your IRA assets to one or two beneficiaries, consider naming several beneficiaries to receive the value of your assets and reduce the risks that any one beneficiary will be forced into a higher tax bracket over the 10-year post death account maintenance period.

There is no one solution that will yield the same benefit for all investors. Rather, IRA account owners should meet with experienced financial advisors to determine which strategy works best for their unique circumstances, including the size of their estates and retirement accounts, the tax rates for themselves and their heirs and their specific estate planning goals.

About the Author: Lee F. Hediger is a co-founding director and chief compliance officer with Provenance Wealth Advisors (PWA), an Independent Registered Investment Advisor affiliated with Berkowitz Pollack Brant Advisors + CPAs, and a registered representative with Raymond James Financial Services. For more information, call (954) 712-8888 or email


Provenance Wealth Advisors, 515 E. Las Olas Blvd., Ft. Lauderdale, FL 33301 (954) 712-8888.

Lee F. Hediger is a registered representative of and offers securities through Raymond James Financial Services, Inc., Member FINRA/SIPC.


Raymond James is not affiliated with and does not endorse the opinions or services of Berkowitz Pollack Brant Advisors + CPAs. PWA is not a registered broker/deal and is independent of Raymond James Financial Services. Investment Advisory Services offered through Raymond James Financial Services Advisors, Inc., and Provenance Wealth Advisors.

This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of the advisors of PWA and not necessarily those of Raymond James. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss any tax or legal matters with the appropriate professional. Prior to making any investment decision, please consult with your financial advisor about your individual situation.


The information contained in this report does not claim to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Investments mentioned may not be suitable for all investors.