BSMG Blog: Protecting the Future of Families and Businesses

Advisors Take Note - Legislation that Could Impact IRAs!

Posted by Russell E. Towers JD, CLU, ChFC on 28 Oct 2016
Russell E. Towers JD, CLU, ChFC

Currently, the US Senate is considering legislation that would eliminate a life expectancy payout for inherited IRAs. 

Legislation that would eliminate a life expectancy limited payout of 5 years..png

On September 21st, Senate Finance Committee Chairman Orrin Hatch (R-Utah) released a modified proposal to the so-called Chairman's Mark. This prospective legislation proposed a number of retirement provisions - one of which included changes to inherited IRAs. The proposal passed the Senate Finance Committee on a unanimous 26-0 vote. 

This inherited IRA proposal would force IRA beneficiaries to distribute those assets over no more than 5 years. It would eliminate the life expectancy "stretch" option available under current law. This 5 year post-death distribution rule would only apply to IRA amounts above $450,000.

Stay tuned to keep informed! The proposal may or may not be considered for a vote in the December "lame-duck session" of Congress after the election. The House Ways and Means Committee has not proposed any changes to the current "inherited IRA" rules. 

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Topics: IRAs, Retirement Planning Strategies