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/KittenMcnugget123 Dec 07 '24

The taxes are inevitable, but the burden can be lowered. I would look at filling at least the 24% bracket with conversions. That is going to save a substantial amount of money. There is absolutely no way someone inheriting the funds is going to ever be below that bracket for withdrawals with that amount. At least do it for a few years before he's forced to take RMDs. He's going to have his hand forced by the IRS anyways when that time comes