Sponsored Content: Four Tax & Estate Planning Gaps Texas Physicians Should Revisit

Transfer-on-death (TOD) accounts, inherited IRAs, Roth conversions, and beneficiary forms have a bigger impact than many realize. 

For many physicians, retirement accounts represent a substantial share of household wealth. However, as tax laws have changed, many financial plans have not kept pace. Here are four areas that deserve a fresh review:

In Texas, Probate Is Often Not the Main Problem

• In some states, probate is expensive and time-consuming.
• In Texas, a well-drafted will can allow for independent administration and a relatively efficient settlement process.
• The larger risk may be using TOD designations, which can override a broader estate plan.

Inherited IRAs: The "Stretch" Is Largely Gone

• For years, children inheriting an IRA could “stretch” required minimum distributions (RMDs) over their lifetime, minimizing taxes.
• Under current law, many non-spouse beneficiaries must distribute inherited IRAs within 10 years.
• This can force high-earning beneficiaries to recognize additional taxable income over a short time, potentially pushing them into higher tax brackets.
• Beneficiaries may be able to offset some taxes by increasing their own retirement plan contributions or other coordinated strategies.
• Original owners should consider prudent lifetime tax planning.

Roth Conversions: Careful with the Timing

• Roth conversions can be powerful, but timing matters.
• For many physicians, converting large pre-tax balances during peak earning years can mean voluntarily paying tax at the highest marginal rates.
• Lower-income years may offer better conversion windows.

Beneficiary Forms May Matter More Than Your Will

• Retirement accounts generally pass by beneficiary designations, not by the instructions in your will.
• We have seen outdated forms send substantial assets to the wrong person or entity, including ex-spouses.
• Take 15 minutes to review your beneficiary designations on your retirement accounts.

Retirement planning is often framed as an investment problem. In practice, some of the most consequential decisions involve taxes, titling, beneficiary designations, and coordination across your advisors. 

Monte C. Byrd is the founder of M.C. Byrd Wealth Management, a fee-only fiduciary serving high-net-worth Texans since 1990.

Disclaimer: Publication of an advertisement does not constitute or imply a recommendation, endorsement, or approval by the Texas Medical Association (TMA). The claims, views, and opinions expressed in this advertisement are those of the advertiser.