More than 11,000 Americans now hold IRAs or 401(k)s worth $10 million or more, with over 1,000 above $25 million, according to the Joint Committee on Taxation. These balances don’t usually come from routine index fund contributions. They typically trace back to startup founders, venture capitalists, and corporate insiders who placed low-cost early-stage equity into self-directed IRAs, then watched valuations compound inside a tax-shielded wrapper.
Building that kind of wealth is an achievement, but keeping and protecting it can be a challenge. Mega-retirement accounts have drawn increasing scrutiny in Washington. Legislative proposals frequently aim to cap total retirement account balances or enforce mandatory distributions once balances surpass $10 million. In today’s tax landscape, it’s worth asking whether a mega IRA is still a top vehicle for a family’s long-term growth.
Traditional IRAs offer an upfront deduction and tax-deferred growth, but every dollar that comes out is taxed as ordinary income, up to 37% federally plus state tax. That matters most for rapidly appreciating private equity, since gains that would otherwise qualify for long-term capital gains treatment (capped at 20% plus the 3.8% Net Investment Income Tax) instead lose that character entirely once held inside a traditional IRA, converting decades of growth into ordinary income at withdrawal. It gets worse for heirs: under the SECURE Act, most non-spouse beneficiaries must empty an inherited IRA within ten years. A $20 million traditional IRA forced out over a decade can push an heir into the top bracket every single year, handing close to half the account to the IRS.
Roth accounts allow for tax-free withdrawals and there’s no lifetime RMD requirement, which makes the Roth a natural home for high-upside assets. However, there’s still a potential estate issue. What often gets missed is that the full Roth balance still sits inside the owner’s taxable estate at death. An entrepreneur who seeds a Roth with early-stage shares that grow to $50 million has handed heirs an income-tax-free windfall, along with a potential $20 million estate tax bill, assuming the 40% rate on amounts above the exemption. Withdrawing the mega non-taxable assets at 59 ½ or older and gifting it directly or indirectly to heirs is a strategy that will quickly reduce available exemption.
This is where irrevocable grantor trusts, structures like Intentionally Defective Grantor Trusts and Spousal Lifetime Access Trusts, may earn their place in the conversation. Moving a high-conviction, early-stage position into one of these trusts before it appreciates can remove future growth from the taxable estate, while still allowing tax-efficient treatment for heirs. It’s worth noting these structures have faced their own legislative threats. During Build Back Better negotiations in 2021, House Democrats proposed pulling grantor trust assets back into the taxable estate and ending valuation discounts, a change that would have undercut IDGTs and SLATs directly. It didn’t pass, but it’s a reminder that no single strategy is immune from Washington’s attention.
For families sitting on concentrated, high-growth positions, traditional IRAs may be better suited for steady, income-generating assets like private credit or REITs. Roth IRAs can work well for high-growth equity when total wealth sits comfortably below the estate tax exemption. Irrevocable trusts are often an appropriate consideration for early-stage, high-conviction bets once a family’s wealth exceeds that threshold. Taxable accounts remain a strong option for appreciated assets a family intends to hold until death, where the step-up in basis eliminates the capital gains question altogether. Until this time, there are strategies to hedge, diversify, and generate income while minimizing taxes on large, growing positions.
Growing and preserving wealth across generations takes thoughtful vehicle selection and staying ahead of a shifting legislative environment. Please reach out to your Wealth Manager with questions.
Sources:
- ThinkAdvisor, “Mega-IRA Crackdown Back in Play With New Bill” (July 22, 2026)
- Senate Finance Committee, Joint Committee on Taxation data on retirement account balances
- Charles Schwab, SECURE Act 10-year distribution rules for inherited IRAs
- Holland & Knight, House Ways and Means 2021 Build Back Better grantor trust proposals
