For many high-net-worth families, an IRA is quietly the most inefficient asset on their balance sheet.
It's familiar. It feels safe. It's tax deferred.
And yet, by the time it reaches the next generation, it may be one of the most heavily taxed assets they will ever inherit.
We routinely see families with $3 million, $5 million, or $10+ million sitting inside IRAs or other qualified plans, often built over decades of disciplined saving and strong market performance. What's less obvious is what happens to those dollars after the original owner is gone.
That's where the problem begins.
IRAs are subject to a unique and punitive combination of taxes at death, particularly when in a taxable estate:
Even with the current estate tax exemption, many affluent families still face meaningful exposure. And unlike other assets, an IRA cannot receive a step-up in basis. Every dollar remains fully taxable as ordinary income.
The result? A lifetime of disciplined tax deferral can end in a cascading tax burden for heirs, as income and estate taxes collide at exactly the wrong time.
Before this harsh reality comes to fruition, families need to ask themselves a question: Is there a way to reposition this asset so that more of it actually benefits our heirs?
An Retirement Plan Rescue is not about abandoning qualified plans or undoing decades of good planning.
It's about changing the tax character of wealth before it changes hands.
At its core, an Retirement Plan Rescue strategy seeks to:
One such approach, sometimes referred to as a leveraged IRA strategy, uses life insurance as a tax transformation tool; leveraging modest taxable outflows today to create substantially larger tax-free benefits at death. Importantly, this is not a retail insurance solution. It is a highly technical strategy that sits at the intersection of tax law, estate planning, and qualified plan regulation.
Many families default to the status quo: taking required minimum distributions, paying income tax annually, reinvesting what's left in a taxable account, and letting heirs sort it out later.
But when modeled over time, especially for estates exposed to estate tax, this approach can result in more than half (and even up to three-quarters) of the IRA's value being lost to taxes by the second death.
Even Roth conversions, while powerful and often delivering materially better outcomes than doing nothing, require significant upfront tax payments and still leave the asset inside the taxable estate. In scenarios where estate tax exposure exists, the difference between a Roth conversion and a properly structured leveraged IRA strategy can amount to millions of additional dollars reaching the next generation.
Retirement Plan Rescue strategies exist because families want better control over the outcome, not just the process.
An Retirement Plan Rescue is not for everyone.
It is generally appropriate when:
It is not a shortcut. It is not a loophole. And it is certainly not something to pursue without coordinated advice from tax, legal, and insurance professionals.
Done correctly, however, it can materially increase the amount of wealth that ultimately reaches children and grandchildren, often by millions of dollars, without increasing investment risk.
The most important takeaway isn't the mechanics.
It's this: An asset of this significance deserves the same level of strategic planning as your business, real estate, or investment portfolio.
For many affluent families, the IRA has been left on autopilot for decades. A Retirement Plan Rescue is simply the moment when that autopilot is turned off, and intentional planning begins.
If your estate plan assumes that your heirs will "figure it out," it may be time for a deeper conversation.
This article is for educational purposes only and does not constitute tax, legal, or investment advice. Any advanced strategy should be evaluated in coordination with qualified advisors based on individual circumstances.
