Reducing the size of a large taxable estate with a Roth conversion could help preserve more of that estate for your heirs
ATLANTA, April 14, 2014 /CNW/ - According to the experts at Atlantic Trust, the U.S. private wealth management division of CIBC (NYSE: CM) (TSX: CM), owners of traditional individual retirement accounts can add value to their estates while maximizing their financial legacies by converting them to a Roth IRA.
When an individual dies, taxes are due on his or her estate if the estate is valued over the federal exclusion amount (currently set at $5.34 million). While both traditional and Roth assets are counted as part of that estate, the revenue tax that was deferred during the person's lifetime comes home to roost. When an individual makes a full conversion to a Roth IRA, ordinary income taxes and possibly the Medicare surtax are due on the total amount converted in that tax year, but paying income taxes now on converted assets removes them from the taxable estate, thereby reducing its size.
"Another benefit of converting a traditional IRA to a Roth is that Roth owners are not required to take required minimum distributions (RMDs) - the minimum annual amount that must be withdrawn from an IRA or other tax-deferred account beginning at age 70 ½ - allowing them to pass on more of their assets instead of having to spend them in retirement," said H. Arthur Graper, managing director at Atlantic Trust.
Also unlike traditional IRAs, Roth IRA earnings can grow and be withdrawn tax-free under certain conditions. Heirs can even withdraw earnings tax-free regardless of their age or the age of the deceased account owner, as long as the Roth IRA conversion assets have existed for at least five years.
Those interested in conducting a Roth IRA conversion should rely on the guidance of a trusted tax adviser, as conversion can be complex process. Atlantic Trust provides a number of resources on its Online Resource Center to help. Read "A Roth IRA Conversion May Complement Estate and Legacy Plans" for more information at www.atlantictrust.com.
About Atlantic Trust
Atlantic Trust is one of the nation's leading private wealth management firms, offering integrated wealth management for high net worth individuals, families, foundations and endowments. The firm considers clients' financial, trust, estate planning and philanthropic needs in developing customized asset allocation and investment management solutions. Experienced professionals deliver a broad range of solutions, including proprietary investment offerings and a robust open architecture platform of traditional and alternative managers. Atlantic Trust operates in 12 full-service locations throughout the U.S. with $24 billion in assets under management (as of December 31, 2013). For more information, visit www.atlantictrust.com.
CIBC is a leading Canadian-based global financial institution. Through our Retail and Business Banking, Wealth Management and Wholesale Banking businesses, CIBC provides a full range of financial products to individual, small business, commercial, corporate and institutional clients in Canada and around the world.
CIBC Wealth Management provides relationship-based advisory services and an extensive suite of leading investment solutions to meet the needs of personal, institutional and high-net-worth clients through an extensive distribution network, that includes CIBC Private Wealth Management, CIBC Wood Gundy and CIBC Investor's Edge. Our asset management, retail brokerage and private wealth management businesses combine to create an integrated offer, delivered through nearly 1,500 advisors across Canada. In addition, CIBC Asset Management provides global money manager services to institutional and high-net-worth clients and industry-leading retail investment solutions through our two mutual fund families - CIBC and Renaissance - and the CIBC family of managed portfolio solutions.
SOURCE: Atlantic Trust Private Wealth Management
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Media inquiries: Caroline Van Hasselt, Director, CIBC External Communications and Media Relations, (416) 784-6699, email@example.com or Carolyn Donnelly, Atlantic Trust Director of Marketing, (404) 881-3417, firstname.lastname@example.org.