Proposals to Kill the Stretch IRA However, these valuable estate planning tax benefits have put the stretch IRA on the Congressional chopping block today. Many argue that, because IRAs are afforded tax benefits as a part of the tax policy behind encouraging retirement income planning, they should not be entitled to the same benefits when used as wealth transfer vehicles. While the Administration proposal to cap tax-deferred accounts at $3 million would have deterred the use of IRAs to transfer wealth, many have criticized that method as discouraging retirement savings. As such, proposals that would limit the “stretch” period for a non-spousal inherited IRA to five years are gaining widespread support. This proposal is perceived as a way to limit the IRA to its intended use while still encouraging clients to save to fund their own retirement expenses—with the added bonus that the five year limitation period would speed up the recognition of the IRA funds for tax purposes.
Posted on: Mon, 29 Jul 2013 00:53:57 +0000
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