No. of Recommendations: 7
inheriting a Traditional IRA can be somewhat problematic for our kids, ...
Yep, it is especially bad because of human lifespans. If your kids are typically 25-35 years younger than you, then when you die, and they inherit that IRA (that has probably grown faster than RMDs for a decade or two), they will be in their peak earning years and thus at their peak tax rates.
You know all those IRA calculators out there? They usually figure the value of tax deferral by calculating tax savings now, versus average tax when taking distributions. But since it usually isn't all distributed in your lifetime, I think a calculation should be added for the remainder that will be taxed at the heirs MARGINAL income tax rate (not at their average rate). This also changes the equation of "Roth 401k versus Traditional 401k" contributions.
