Principles in Practice: Think Beyond Yourself

How about an Inter-generational Roth Conversion?

One of our generous retirees recently came to us with a desire to help their adult children start an investment portfolio, but didn’t know where to begin.  Part of the discussion revolved around the fact that they had to take out Required Minimum Distributions (RMD) from their IRA’s, but then didn’t need those proceeds to fund their lifestyle.  On the other hand, their adult children’s families were making ends meet, but having trouble saving much more for their long-term goals.

So, we suggested that they use their RMD proceeds to set up and fund Roth IRA’s for each of their children in 2013.  They in turn collaborated with their children to confirm that they were each eligible to contribute to a Roth IRA (based on IRS income limitations) and they helped decide which investment custodian would be a good fit for their respective families.

Over time, this will provide a healthy amount of long-term resources for the younger families, while not short-circuiting their drive to provide for their own day-to-day needs.  We don’t advocate “family welfare”, so this was a creative way to support their children’s future without creating a monthly entitlement that would be consumed on routine expenses.

Are you ready to be creative with how you support your family over the years?  We are ready to help you explore your options! Contact us today.

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