A policy change affecting inherited, or “stretch,” IRAs — which currently allow distributions to be extended over the life of the beneficiary, potentially many years for young recipients — may be implemented in the near future as a revenue raiser to help pay for unrelated legislation.
This summer, for example, the Senate tax-writing panel originally contemplated restricting “stretch” IRAs to partially fund highway repairs stemming from a proposed extension of the federal highway trust fund. Under the preliminary arrangement, stretch IRA rules would have been amended to require distribution of the IRAs within five years of the death of the account holder, with some exceptions, including cases where the recipient is a spouse, minor or beneficiary who is no more than 10 years younger than the deceased.
Jon Vogler is a Senior Analyst, Retirement Research, at Invesco Consulting.
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