COULD THE “STRETCH” IRA BE IN JEOPARDY?

The stretch IRA permits a beneficiary to receive a payout from an IRA over their life expectancy.  This option allows the opportunity for the IRA to increase in value while the beneficiary takes minimal mandatory distributions.  For example, if an IRA owner dies, his 45-year-old son as beneficiary may take distributions from the account based upon his life expectancy.  According to the IRA expert, Natalie Choate, the word is that “many Congress-people are convinced that eliminating the “stretch” IRA payout for retirement plan death benefits would simplify the Tax Code, balance the budget, and restore fairness all in one fell swoop.” (Natalie’s Notes, Vol. 17, No. 1. Summer 2016).  The proposal would replace the stretch IRA with a mandatory 5-year payout.  As usual, when Congress sees a potential solution for their fiscal mismanagement, watch your wallet.