4 Ways to Maximize Retirement Wealth Strategies

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Individual retirement accounts (IRAs) are powerful tools for building and preserving wealth. Yet many investors overlook the strategic opportunities IRAs offer beyond simple accumulation. Proactively planning for retirement can significantly enhance a wealth strategy, especially as retirement approaches. Consider these four impactful strategies IRA owners can use to optimize their retirement outcomes.

1. Leverage Qualified Charitable Distributions (QCDs)

For IRA owners aged 70½ or older, QCDs offer a tax-efficient way to support charitable causes while reducing taxable income. In 2025, individuals can transfer up to $108,000 directly from their IRA to a qualified charity—tax-free. For married couples, each spouse can contribute up to the limit from their respective IRA, potentially excluding $216,000 from taxable income.

This strategy becomes especially valuable once Required Minimum Distributions (RMDs) begin at age 73. Normally, RMDs are taxed as ordinary income, potentially pushing retirees into higher tax brackets. By using a QCD to satisfy all or part of the RMD, the IRA owner can reduce taxable income while fulfilling philanthropic goals.

Importantly, QCDs must be made directly from the IRA custodian to the charity. If the funds pass through the IRA owner first, the distribution becomes taxable. While QCDs are not deductible on Schedule A, they reduce adjusted gross income, which can positively affect Medicare premiums, Social Security taxation and eligibility for other deductions.

To ensure proper reporting, IRA owners should retain written acknowledgments from the receiving charities and correctly report the QCD on their tax return (Form 1040, Line 4b, with "QCD" indicated).

2. Consider Roth conversions strategically

Converting traditional IRA assets to a Roth IRA is another proactive strategy. Roth IRAs offer tax-free growth and withdrawals and are not subject to RMDs, which makes them ideal for long-term planning, legacy goals and managing future tax liabilities.

Roth conversions are taxable events, meaning the converted amount is added to the IRA owner’s income for the year. However, executing conversions during low-income years, such as early retirement before Social Security or pension income begins, can minimize the tax impact. Partial conversions over several years can help manage tax brackets and avoid pushing income into higher tiers.

This strategy is especially effective for individuals who expect to be in a higher tax bracket later in retirement or who want to leave tax-free assets to heirs. Roth IRAs also provide flexibility in retirement income planning, allowing retirees to draw from different buckets depending on their tax situation.

3. Align IRA withdrawals with broader financial goals

Many retirees default to taking only the required minimum from their IRAs. However, a more intentional withdrawal strategy can better align with broader financial goals such as liquidity, legacy planning and healthcare funding.

For example, IRA owners who do not need their full RMD for living expenses might use excess distributions to fund long-term care reserves, contribute to 529 plans for grandchildren or invest in life insurance for estate planning purposes. Alternatively, those with significant home equity might coordinate IRA withdrawals with reverse mortgage strategies to balance income needs and preserve assets.

Another overlooked tactic is timing withdrawals to manage adjusted gross income thresholds. For instance, spreading IRA withdrawals over multiple years can help avoid income spikes that trigger higher Medicare premiums or reduce eligibility for tax credits.

Additionally, naming beneficiaries and understanding the implications of the SECURE Act, particularly the 10-year rule for inherited IRAs, can help ensure IRA assets are passed on efficiently and in alignment with estate planning goals.

4. Naming a charitable remainder trust as an IRA beneficiary

In the wake of the SECURE Act, which eliminated the "stretch IRA" for most non-spouse beneficiaries, many IRA owners are seeking alternative strategies to preserve tax efficiency and legacy planning. One powerful option is naming a charitable remainder trust (CRT) as the beneficiary of an IRA.

A CRT is a split-interest trust that provides income to one or more non-charitable beneficiaries for a specified term, either for life or up to 20 years, and then distributes the remaining assets to a designated charity. When structured as a testamentary CRT, it is funded upon the IRA owner's death, allowing the IRA assets to flow into the trust rather than directly to individual heirs.

Benefits of using a CRT as an IRA beneficiary:

• Tax-deferred growth and income flexibility: Because the CRT is a tax-exempt entity, the IRA assets transferred into it continue to grow tax-deferred. The trust then makes annual distributions to the named beneficiaries, which can be tailored to their needs and spread over a longer period than the SECURE Act’s 10-year rule allows.
• Preserving legacy and philanthropy: At the end of the trust’s term, the remaining assets are distributed to a charitable organization, donor-advised fund or family foundation. This structure allows the IRA owner to support causes they care about while still providing for loved ones.
• Estate tax considerations: For individuals with potentially taxable estates, the present value of the charitable remainder interest is deductible from the estate, potentially reducing estate tax liability.

Final thoughts

IRAs are more than just retirement savings vehicles—they're dynamic tools that, when used strategically, can help maximize retirement savings, enhance tax efficiency, support charitable giving and align with long-term financial goals. Whether through qualified charitable distributions, Roth conversions, strategic withdrawal planning or charitable remainder trusts, IRA owners have multiple avenues to strengthen their wealth strategy.

For more information, contact your Fifth Third Private Bank advisor.