Multigenerational Roth Strategy

What’s the single best account to leave your children, dollar for dollar? A Roth IRA you never had to touch. While you’re alive it dodges required withdrawals entirely, and after you’re gone it keeps compounding tax-free for years before your heirs take a cent, tax-free.

Why a Roth is built for inheritance

Most retirement accounts come with a string attached: the required minimum distribution, the forced withdrawal the IRS makes you take from traditional IRAs and 401(k)s starting at 73 or 75. A Roth IRA has no RMD during your lifetime. None.

That one difference changes everything for legacy planning. You can let a Roth sit and compound, untouched, for your entire retirement while you spend down other accounts. Nothing forces you to draw it down, so it grows into the largest, cleanest asset you own, the one most worth passing on.

And when your heirs inherit it, the money comes out income-tax-free. Compare that to an inherited traditional IRA, where every dollar your children withdraw is taxable income stacked on top of their own peak-earning salaries. A Roth hands them spending power. A traditional IRA hands them a tax bill at the worst time in their lives.

The ten-year clock changed the game

Here’s the rule that rewrote inherited IRA planning. Under the SECURE Act, most non-spouse heirs, your adult children, can no longer “stretch” an inherited IRA across their whole lifetime. They generally must empty the account within ten years of your death.

For an inherited traditional IRA, that’s painful: ten years of forced taxable income, often landing right in your child’s highest-earning, highest-bracket decade. For an inherited Roth, the same ten-year window is a gift. The account keeps growing tax-free the entire time, and your child can let it compound and pull the whole thing in year ten, completely tax-free. Same rule, opposite outcome, because of how the account is taxed.

The move: convert on purpose, in the low-tax years

The strategy that ties this together is the Roth conversion, paying tax now to move traditional IRA money into a Roth so it grows and pays out tax-free forever after.

The window most people leave on the table runs from when you retire to when RMDs and Social Security kick in, often your 60s. Income is low, you may be sitting in a lower bracket than you’ll ever see again, and you can convert traditional dollars to Roth at a discount. You’re effectively prepaying your heirs’ tax bill at your low rate instead of letting them pay it at their high one.

There’s a deeper play here that I love for legacy-minded families. If you have enough other assets to live on, you can convert aggressively and treat the Roth as a dedicated inheritance account, never spending it yourself. You pay the conversion tax, the Roth compounds untouched for the rest of your life, then ten more years in your child’s hands, all tax-free. Decades of growth, never taxed again. People badly underestimate what that tax-free compounding adds up to.

The hidden price

A conversion isn’t free. You owe ordinary income tax on every dollar you convert, in the year you convert it, and a large conversion can push you into a higher bracket or raise your Medicare premiums two years later through IRMAA. Convert with a plan, filling up a target bracket each year, not in one reckless lump. See 2026 RMD reduction strategies for how conversions and RMDs interact.

The honest catch: you’re paying tax today for a benefit your kids collect tomorrow. That only makes sense if you can comfortably cover the tax from other money and you genuinely intend to leave the account behind. If you’ll need the Roth for your own spending, the legacy math doesn’t apply.

Is it for you

This fits a family with healthy assets outside their IRAs, a real desire to leave a clean inheritance, and lower-income years to convert into. Pair it with annual gifting and a look at the 529-to-Roth rollover for grandchildren.

The best inheritance isn’t just money. It’s money with no tax bill attached and a decade of tax-free growth still ahead of it. A Roth you never touch is exactly that.