How can I use my Roth IRA account to transfer assets free of estate taxes?
A Roth IRA may be useful in lowering estate taxes. This is accomplished by converting a large IRA to a Roth IRA and paying the associated income tax. For example, if an IRA account worth $1 million is converted to a Roth, which requires payment of income taxes on the transfer. The tax is $400,000 if the bracket is 40%. Paying the tax lowers the gross estate by $400,000, and the estate tax by $200,000 (in 2002), assuming the payer is in the highest estate tax bracket.
