Leave the Kids the Roth, Spend the IRA Yourself: The Inheritance Order Most Families Get Backward.
Most families protect the Roth like a family heirloom and spend everything else first, but that instinct quietly hands the IRS a larger cut of the inheritance than necessary. The account order matters far more than the account balance.
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Most households treat their retirement accounts as the last resort in a spending hierarchy. They spend the checking account first, then the brokerage account, and only touch the IRA when they have to. The Roth sits untouched at the center, protected for “the kids.” The traditional IRA continues to grow because required minimum distributions do not start until age 73. The math often argues for the reverse order.
The reason comes down to how each account is taxed when it changes hands. A Roth IRA passes to heirs tax-free. A traditional IRA passes to heirs pre-tax, meaning every dollar the beneficiary withdraws is taxed as ordinary income at their marginal rate. Under the current 10-year rule for most non-spouse beneficiaries, an adult child inheriting a traditional IRA must empty it within a decade, often during their peak earning years, when their tax bracket is highest.
Why the Traditional IRA Is the “Ugly” Inheritance
Clark Howard put the framing bluntly on his podcast: “A Roth IRA is a great asset to inherit. A traditional IRA is an ugly asset to inherit.” The reason is mechanical. An adult child in their 40s or 50s who inherits a $500,000 traditional IRA cannot let it sit idle. They have to draw it down within 10 years, and each withdrawal adds to their salary. A beneficiary in the 24% federal bracket loses nearly a quarter of every distribution to the IRS, plus state tax in most places.
A Roth flips those mechanics. The 10-year window still applies for most heirs, but the withdrawals are not taxed. The account can also stay invested for the full 10 years, compounding tax-free before the final distribution. Two accounts of identical size deliver very different amounts to the next generation, depending solely on which side of the tax line they sit.
The Retiree’s Actual Spending Reality
The counterargument is straightforward: retirees have to eat. The Bureau of Labor Statistics puts average U.S. household spending at $78,535 in 2024, up from $77,280 the year before. Per capita disposable personal income came in at $68,958 in the second quarter of 2026, while the personal savings rate has fallen to 2.8% from 6.2% in the first quarter of 2024.
Households are now consuming 93.4% of everything they take home. Social Security provides some help at the edges. The 2026 cost-of-living adjustment landed at 2.8%, which roughly matches the current Core PCE inflation index reading of 130.27. For retirees whose spending exceeds their Social Security and pension income, the shortfall has to be covered from somewhere. The strategic question is which account ultimately fills that gap.
The Order That Usually Makes More Sense
The general logic runs in three parts.
- Spend the traditional IRA first, especially in the years between retirement and age 73, when the retiree may sit in a lower bracket than their working children. Every dollar withdrawn at 12% or 22% is a dollar that does not later hit the heir at 24%, 32%, or 35%.
- Consider partial Roth conversions in low-income years. Paying the tax now, at the retiree’s rate, moves money permanently onto the Roth side of the ledger, where it grows tax-free for the rest of the retiree’s life and the heir’s 10-year window.
- Leave the Roth alone. No minimum distributions are required for the original owner. The account compounds untouched, and the heir receives it tax-free.
Getting this backward carries a real cost. The extreme version of the mistake looks like carrying a credit card balance at the current average APR of 20.94% while sitting on a traditional IRA that the retiree is too afraid to touch. Even conservative alternatives like Series I savings bonds offer a composite rate of 4.26% right now, which is well below the cost of revolving debt.
What the Data Does and Does Not Show
None of this is universal. Households with large taxable brokerage accounts benefit from the step-up in basis at death, which changes the calculus. Heirs already in low tax brackets may not face the same drag on inherited traditional IRA distributions. Estate size, state taxes, and charitable intent all shift the answer. The default order most families follow, which preserves the retirement accounts and spends everything else, ignores the tax asymmetry between the two IRAs. The account most families work hardest to protect is often the one that carries the largest tax cost to heirs.
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David Beren has been a Flywheel Publishing contributor since 2022. Writing for 24/7 Wall St. since 2023, David loves to write about topics of all shapes and sizes. As a technology expert, David focuses heavily on consumer electronics brands, automobiles, and general technology. He has previously written for LifeWire, formerly About.com. As a part-time freelance writer, David’s “day job” has been working on and leading social media for multiple Fortune 100 brands. David loves the flexibility of this field and its ability to reach customers exactly where they like to spend their time. Additionally, David previously published his own blog, TmoNews.com, which reached 3 million readers in its first year. In addition to freelance and social media work, David loves to spend time with his family and children and relive the glory days of video game consoles by playing any retro game console he can get his hands on.
