Obama's 6 Retirement Proposals

When President Obama unveiled his budget for the upcoming fiscal year, which begins on Oct. 1, it represented a wish list.

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Comments (2)
In almost every case the winner not listed is the federal government or the IRS. I'm a bit perplexed about this list. Is it a series of alternatives proposed for consideration or an actual list of intended changes to be proposed? The last item conflicts with the second. If one can roll any inherited IRA over, much as a surviving spouse can today, then the beneficiaries are the clear winners. Why would anyone not roll over but instead opt for the "empty in five years" rule proposed in the earlier item? Doesn't make sense to me. The rollover provision is clearly in favor of the beneficiary; the five year empty rule clearly in favor of the IRS!
Posted by John P | Monday, August 19 2013 at 4:02PM ET

Just because someone might be given the ability and option to rollover an inherited IRA (as a surviving spouse can now, as you point out), doesn't mean the regulations won't also require those funds, and any increase or decrease in value, to ALSO be distributed within the 5 years. The two "wishes" from the administration do not have to be mutually exclusive; that is, it can be both--roll it over AND distribute it within 5 years.

Now, I know what someone might be thinking: What's the point of requiring the account balance of an inherited rolled over IRA to be distributed within 5 years? Two things come to mind: 1) a simplified version of the rules for inherited IRAs; and 2) tax revenue, i.e., no stretch IRA as Mr. Slott points out.
Posted by Scot S | Tuesday, August 20 2013 at 3:05PM ET
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