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It pushes the RMD out to 72.5 and it forces non spouses that inherit your IRA to withdraw the funds in 10 years.
So if you leave your children a 1 million dollar IRA, instead of taking RMDs, they may have to take $100,000 a year until it's depleted. Thereby paying the taxes sooner.
Unfortunately it also raises the taxes of whoever inherited it.
Some people with special-needs children use stretch IRAs to help insure their child's financial welfare after their own demise, and this change would effect their ability to do that. But that's a special case. In general, I don't have a problem with retirement accounts being treated as just that - money intended to be spent in retirement, not passed onto heirs on a tax-advantaged basis.
Some people with special-needs children use stretch IRAs to help insure their child's financial welfare after their own demise, and this change would effect their ability to do that. But that's a special case. In general, I don't have a problem with retirement accounts being treated as just that - money intended to be spent in retirement, not passed onto heirs on a tax-advantaged basis.
Yes, but only if you didn't already put the money into an IRA under the assumption that the tax laws wouldn't change and the stretch IRA provisions would remain intact. Those are the people I feel sorry for. (Although maybe there's a way the IRA could be inherited by a trust to avoid those big early RMD payouts.)
Going forward, saving money in a Special Needs Trust is definitely the safer move!
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