Don't Let Congress Take Away Our 2nd Greatest Tax Break!

Sen. Baucus figures it will take 10 years to grab $4.6 Billion of our hard earned IRA money initially earmarked for our heirs. The “stretch IRA”, an outstanding estate planning tool, will be doomed if lawmakers get their way. In the latest transportation funding bill, language is buried deep within that would kill the “stretch IRA” for most non-spouse inheritors, primarily our kids. Those families who have established multi-generational IRAs to stretch out the tax burden over the life expectancy of a child or grandchild, thereby allowing those accounts to continue to grow, will see those accounts uprooted. These heirs will be forced to withdraw all funds and pay taxes over a 5 year period. For many, this will force heirs into top tax rates, causing them to lose 35 to 80% in income and/or estate taxes. The “stretch IRA” allows distributions to be controlled, thereby maintaining low tax rates over the years and allowing heirs use of this money over a period of up to two generations. Left alone, congress would actually receive more taxes over the long run while these accounts continue to grow and small annual required minimum distributions are taken, but unfortunately lawmakers are looking for a quick fix and don’t care about how this law will sabotage a lifetime of family saving and planning.