I have an associate that is 73 with approx one million in a traditional IRA.
Their financial advisor is encouraging them to withdraw a large portion
and place it in an annuity because there will be less taxes when they die.
This would leave their heirs with more and uncle Sam with less. Now I
know Bob does not look favorably on annuities particularily when the
financial advisor has so much to gain in way of commissions. My question
is: What is the best way to shelter one million dollars in a traditional IRA
from taxes?

If he withdraws the money from the IRA he will pay regular tax on it. The adviser should be telling him to buy the annuity inside the IRA to avoid paying income tax on the money used to fund the annuity. If he realy said to buy the annuity outside of the IRA find a new advisor.

I do not know of any tax savings between the IRA and annuity. If tax savings is the reason for the annuity I would not go to the annuity.

My impression is that having an annuity as part of an estate can lead to very heavy taxation. I think the planner is giving bad advice.

Look at converting part of the IRA to a Roth and investing in stock for the heirs. Taxes are due when the conversion is made but all future growth is tax free and the funds maybe able to grow for decades. There will be minimal annual withdrawls required by the heirs but the assets can still grow all their lives and be their for their retirement.

If married maybe taking money out of IRA and putting it in wifes name may make full use of the 650,000 exemption each has. Also, could take money out of IRA and make gifts. Would save estate tax but not income tax.

I think a good fee only planner or an estate planning attorney maybe the best investment at this point.

I think I would look for another opinion