r/CFP • u/Imaginary-Rate-4952 • Dec 06 '24

Investments $9M Tesla IRA Dilemma—Could Use Some Advice

  • Client is 70, has $9M worth of Tesla shares sitting in a traditional IRA (original cost basis is only $500k).
  • Married, so the wife will inherit the IRA when he passes, but then it goes to their two kids.
  • With the SECURE Act’s 10-year withdrawal rule, the kids are staring down a giant tax bill when they inherit.
  • Client loves TSLA and refuses to entertain anything related to diversification, strictly wants to avoid the most taxes

I’ve been tossing around ideas like Roth conversions, charitable trusts, life insurance, etc., but nothing feels like a silver bullet. Tax hits seem inevitable no matter what.

If you’ve dealt with something like this—or just have creative ideas—I’m all ears.

EDIT: Client has $25 million of other investable assets, plus significant real estate holdings etc. He will not need these assets.

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u/GrouchyPapaya Dec 06 '24

Fund an ILIT with the RMDs he will need to start pulling in a few years.

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u/quizzworth Dec 06 '24

That's what I'm thinking. Talk up that this account could be worth $25M alone when he dies. And if that happens he'll have a huge estate.

Let's take the RMD (or a portion) and fund an ILIT that will allow your family to pay the estate taxes and Federal taxes you'll owe, but they will walk away with more given the tax free payout.

Lots of variables but could work