As Congressional budget negotiations over the need for increased tax revenue heat up, some of the tools that your clients have grown accustomed to including in their estate planning strategies are taking center stage once again.
The popularity of the Obama administration’s proposals to cap the value of tax-deferred retirement accounts is fading — and the focus has shifted to proposals that would eliminate the “stretch” IRA instead. With widespread support gathering behind eliminating the extended tax deferral associated with stretch IRAs, preparing clients today can prevent surprises in the future. There are a few simple steps these clients can take to minimize the fallout should the death of the stretch IRA be near.
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.
Preparing your clients
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