Episode 184 - It’s Looming... How to Prepare for the Death of the Stretch IRA - Part I

Retirement and estate plans may soon be taking a huge tax hit from the IRS. The “stretch IRA” has been a critical tax management tool for investors and estate planners for decades. Current rules allow beneficiaries of inherited IRAs to limit distributions to the minimum, which maintains money in the tax-deferred environment and allows for compound tax-deferred growth - a very profitable strategy. But in September, the Senate Finance Committee unanimously voted to kill the stretch IRA. It is very likely that this change will become law sometime in 2017 - and that new law will require those who inherit an IRA to pay taxes on all but $450,000 of the inherited IRA within five years. While the strategies in Jim’s new book, The Ultimate Retirement and Estate Plan for Your Million Dollar IRA (available for free at paytaxeslater.com) will reduce the impact of this miserable law, it will still be a major blow to the heirs of anyone who has more than $450,000 in their IRA or retirement plan. In this episode of The Lange Money Hour, Jim will talk about the impact of the “death of the stretch” for everyone who isn’t a financial planner--that is to say, in layman’s terms that we can all understand. TOPICS COVERED: 1. How Does the Stretch IRA Save My Heirs Money? 2. Calculating Your Minimum Required Distribution 3. Why Is the Stretch IRA Likely to Go Away? 4. Without Stretch, Heirs Must Pay Taxes on Entire IRA in 5 Years 5. ‘A Heist of a Middle-Class Retirement’ 6. Death of the Stretch IRA Would Not Affect Spouses 7. IRAs Less Than $450,000 Not Affected If Stretch IRA Dies 8. Tax Exclusion of the First $450,000 Would Be Prorated 9. Exceptions for Disabled, Chronically Ill and Minors To read the show transcript or listen to the MP3 file, http://bit.ly/2lo0Xmd