Should You Leave Your IRA to Your Children?
For many parents, the answer feels obvious: “Of course I want my IRA to go to my children.”
That instinct is understandable. But with larger IRAs, the better question is not only who should inherit the account. It is what kind of asset they are inheriting, what taxes may follow, and whether there is a better way to accomplish the same family goal.
A traditional IRA can be a wonderful retirement asset. As an inheritance, it can also be a compressed tax problem for the next generation.
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The Short Answer
Yes, you can leave your IRA to your children. But whether you should leave them a traditional IRA, a Roth IRA, taxable assets, life insurance, charitable assets, or some combination depends on taxes, family circumstances, charitable intent, your children’s income levels, and your estate plan.
For larger IRAs, beneficiary planning should be coordinated with the broader estate plan and retirement tax strategy. This related piece on inheriting a $3 million IRA explains why inherited IRA rules can become so important.
A Traditional IRA Is Not the Same as Other Assets
If your children inherit a taxable brokerage account, they may receive a step-up in cost basis under current law. That can reduce or eliminate capital gains on appreciation that occurred during your lifetime.
A traditional IRA is different. It does not receive that same type of income tax reset. Withdrawals from an inherited traditional IRA are generally taxable as ordinary income to the beneficiary.
That means a $1 million traditional IRA is not the same inheritance as a $1 million taxable account. The after-tax value may be very different.
The 10-Year Rule Changed the Planning Conversation
Under current inherited IRA rules, many non-spouse beneficiaries must withdraw the inherited IRA within 10 years. Depending on the circumstances, annual distributions may also be required during that period.
That creates a problem for adult children in their peak earning years. They may inherit an IRA while they are already in a high tax bracket. Then they are required to withdraw the inherited money within a compressed time frame, potentially stacking IRA income on top of salary, bonuses, business income, or other investment income.
Parents often think they are leaving a gift. They are. But they may also be leaving a tax bill.
Roth Conversions Can Shift the Tax Burden
One way to address this is to convert some traditional IRA assets to Roth during your lifetime.
That means you pay tax now so the Roth assets may grow tax-free and eventually pass to heirs in a more tax-efficient form. This can be especially attractive if you are in a lower tax bracket than your children, or if you have a window before RMDs begin.
But Roth conversions are not automatically right. They can affect tax brackets, Medicare premiums, cash flow, and the rest of the plan. The question is whether paying tax during your lifetime produces a better family outcome than forcing your children to pay tax later.
For a deeper discussion, see The Hidden Cost of Waiting on a Roth Conversion.
Charitable Giving May Change Which Assets Go Where
If you are charitably inclined, leaving IRA assets to charity can be very tax-efficient. A qualified charity generally does not pay income tax on IRA distributions. Your children, by contrast, usually would.
That can make it more efficient to leave IRA assets to charity and other assets to children.
This does not mean charity should replace family. It means the asset mix matters. If a family plans to give to charity anyway, the IRA may be one of the best assets to use for that purpose.
Trusts Can Help, But They Can Also Create Problems
Some families want IRA assets controlled through a trust. That may be appropriate when there are minor children, spendthrift concerns, blended families, second marriages, creditor issues, or special needs planning.
But naming a trust as IRA beneficiary should be done carefully. Trust tax rates can be compressed, inherited IRA rules are technical, and poorly drafted beneficiary language can create unintended consequences.
This is an area where the estate attorney, tax professional, and wealth advisor should be coordinated before forms are signed.
Do Not Forget the Spouse
For married couples, the first beneficiary conversation is often about the surviving spouse.
A spouse has options that children do not have. Spousal rollovers, income needs, survivor tax brackets, Social Security changes, and RMD timing all matter.
Sometimes the best planning for children begins with protecting the surviving spouse’s flexibility first. The estate plan should not be so focused on the next generation that it makes life harder for the person who remains.
The Best Answer Often Uses Multiple Buckets
Many families do not need a single answer. They need a coordinated mix.
Some assets may go to children. Some may go to charity. Some may be converted to Roth. Some may remain traditional IRA assets. Some taxable assets may be preserved for step-up in basis. Some insurance may be used to create liquidity.
The point is not to make the IRA disappear. The point is to understand the role it plays in the family’s after-tax estate plan.
Final Thought
Leaving your IRA to your children may be perfectly appropriate.
But it should not be automatic.
If your IRA is one of your largest assets, your beneficiary designations may be one of the most important tax decisions your family ever experiences. A few hours of planning now can save your heirs from years of confusion, unnecessary taxes, and rushed decisions later.
At One Bridge Wealth Management, we help families make thoughtful, tax-aware decisions about retirement, investments, and wealth planning.
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About the Author: John Wahl is a CFP® and ChFC®, co-founder of One Bridge Wealth Management, and was named to the Forbes 2025 Best-In-State Next-Gen Wealth Advisors list. One Bridge is a fee-based independent wealth advisory practice serving high-net-worth families in the St. Louis area. One Bridge Wealth Management acts as a fiduciary when managing assets.
2025 Forbes Top Next-Gen Wealth Advisors, created by SHOOK Research. Presented in Aug 2025; based on 03/31/25 data. Advisors pay a fee to hold out marketing materials. Not indicative of advisor’s future performance. Your experience may vary.
This content is for informational purposes only and does not constitute personalized tax, legal, or investment advice. Please consult a qualified tax professional regarding your specific situation.