Please say it isn't so, Joe, but if lawmakers get their way the outstanding estate transfer tool called the "stretch IRA" is doomed. In the latest transportation funding bill, language is buried deep within that would kill the stretch IRA for most non-spouse inheritors.
Yes, you read that correctly; the ability to select an option to delay taxes on inheriting your parent's IRA or even the ability to "disclaim" the inheritance and pass it down the line to kids and grandkids is in jeopardy. If you're forgotten exactly what the stretch IRA is or how it works, here is a very brief refresher:
Typically when the owner of an IRA dies, the spouse will hopefully inherit the IRA as a named beneficiary (read my previous blog about the horrors of naming the estate as beneficiary of your IRA). And as such, the spouse can either rollover the entire IRA into their own IRA and if much younger than the deceased spouse, can push back paying the taxes for many more years. It is also extremely wise to name contingent beneficiaries even if the primary beneficiary is likely to want to inherit the IRA. Naming contingent beneficiaries is just a smart thing to do.
