Alisa Wolfson at MarketWatch answered a reader who plans to leave a $1 million Roth IRA and a $600,000 home to a single heir and wanted to know whether that is enough to provide financial security.
The Roth account is the crown jewel here. A $1 million Roth passes to an heir completely income-tax-free, unlike a traditional IRA or 401(k), where every withdrawal is taxed. Under the 10-year rule the heir will need to empty it within a decade, but every dollar comes out clean, and it can keep growing tax-free inside that window. The home comes with a stepped-up basis, so the capital gain built over the reader's lifetime is erased at death.
Whether it is enough is a different question, and the honest answer is that it depends. The answer changes depending on the heir's age, how many years they will need the money to last, whether they will need income from the estate immediately or can let it grow, the local real estate market and whether selling the home makes more sense than holding it, and any estate or inheritance taxes at the state level. For a 30-year-old with a career, $1.6 million is a powerful head start. For a 60-year-old with no other savings, it is a retirement that needs to be managed carefully.
The practical step is to get the planner, the tax adviser and the estate attorney talking now. Getting these three people aligned before anything happens is what separates a clean transfer from a costly, drawn-out one.
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