Senate Majority Leader Harry Reid, D-Nev., has removed a controversial provision within a Senate highway bill that would have reduced the value of inherited IRAs, commonly referred to as stretch IRAs.
The bill, S. 1813, the Highway Investment, Job Creation, and Economic Growth Act, included a provision that would no longer permit tax deferred stretches of IRAs for beneficiaries other than a spouse, minor children or the disabled. Others, such as adult children, would have only been permitted a five-year window to defer.
The provision would have also required beneficiaries to pay taxes on inherited IRAs over five years instead of spreading them over their lifetimes, and would have applied to deaths after Dec. 31, 2012.
