M*: The End Of Favorable Tax Treatment For Inherited IRAs?

Ted

FYI: As part of a set of retirement provisions in the Setting Every Community Up for Retirement Enhancement Act of 2019, or SECURE Act, Congress would make it harder for heirs who inherit a tax-deferred retirement account (like a 401(k) or an IRA) to shelter the money from Uncle Sam. The set of provisions enjoys wide, bipartisan support, so it’s likely to pass sooner rather than later. These rule changes may at first seem like a big change, but taking a wider view, they probably won't have much of an impact.
Regards,
Ted
https://www.morningstar.com/articles/942416/the-end-of-favorable-tax-treatment-for-inherited-iras

catch22

M*'s write, IMHO; is full of fluff and touchy/feely words.
While RMD requirements would change (for the good), basically; the tax revenue raised by reducing the stretch period will subsidize the other programs.
So, taking from much of the middle class, NO; I'll change that to "working class" who have tried their best to save for retirement, and if the spouse(s) pass before using all of their tax sheltered account monies..............well, the children or whomever will get the tax whack. I'm not writing about the ultra wealthy, but the regular folks.

I questioned (shortly after the passing of the house version) our U.S. rep. about the nature of this transfer of wealth for the working class; but have not had a reply yet, and they are still on break.

Better overview of SECURE ACT.

BenWP

This is a biggie for me. Thanks, @catch22, for that Forbes link, which contains an excellent article. It even quotes a financial planner in my area whose services may become even more in demand if this legislation passes. My 1040 may have become simpler to fill out, but these changes in rules for distribution of tax-sheltered accounts will really complicate matters.

catch22

Hi @BenWP

This is a link from the Forbes article, that you may have already checked; but I'll place regardless. The Senate version is also within the article.

Secure Act............. non-spousal inheritance tax implications.

Go to the money, eh? IMHO, this proposed legislation travels directly to what is likely one of the biggest pools of money at this time........IRA's and related held by the boomers.

Michigan in 2012 (Republican governor/legislature) successfully traveled this road, requiring the MI Supreme Court to uphold legal challenges. The road being, changing the taxation of pension monies; but targeting a narrow age group of boomers. This in itself, was immoral, IMHO.
I argued every which way of the negative side(s) of this with emails to legislators and the state treasurer. As the years have moved along, some of the negative has shown its face. I personally know a number of retired boomers who decided to make the move to Florida (no pension monies taxation); due in part to the Michigan pension taxation changes. So, this tax base is now gone from Michigan......tax base = monies spent locally and anything else one may imagine that these folks would have spent in their state (Michigan). So, the state no longer gets the tax on pension monies, or other monies that would have been spent here. $'s gone, gone, gone and never to return. I do believe I'm becoming redundant here.
Just my 2 cents worth.

Take care of you and yours,
Catch

BenWP

I was one of the grandfathered age groups, @Catch, here in MI, so escaped the effect of the original legislation. I’m still proud to have been union, but my state is certainly no longer pro-worker. Indiana eliminated collective bargaining for public employees by gubernatorial fiat; Wisconsin went to the dogs funded by Ménard money, and we are also a “right to freeload” state. Hard to fathom, at times.