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Roth change for heirs
Old 09-29-2019, 05:25 PM   #1
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Roth change for heirs

Planning to leave an IRA to the grandkids? Not so fast. - The Wall Street Journal

See linked article: https://apple.news/A10CjNj8NQKKKWiD5TugUSg
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Old 09-29-2019, 05:28 PM   #2
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There's a lengthy and well informed discussion about that here http://www.early-retirement.org/foru...-97142-17.html
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Old 09-29-2019, 05:29 PM   #3
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Could not see the article.
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Old 09-29-2019, 06:23 PM   #4
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Could not see the article.
Yeah, paywall.
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Old 09-30-2019, 05:36 AM   #5
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Another paywall article from WSJ. They seem to creep in every place one visits.
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Old 09-30-2019, 08:15 AM   #6
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Try this link.... works for me. https://www.wsj.com/articles/plannin...st-11569576614

Odd article though... the main protagonist has made Roth conversions and made his grandchildren the beneficiaries of the Roths and is upset that the stretch IRA might be eliminated. So his beneficiaries will have to withdraw from the Roths within 10 years rather than a longer period... a minor blow IMO... the grandchildren withdrawals will still be tax-free since they are in a Roth.... so the beneficiaries will only get a decade of tax-free compounding rather than 4-5 decades.

Quote:
... A decade ago, after providing for his wife and two children, Mr. Folk decided to extend the life of his savings by arranging for his four grandchildren to inherit individual retirement accounts, or IRAs, each worth more than $1 million.

Mr. Folk made this move because when young people inherit either a traditional IRA or a Roth IRA, the accounts can benefit from decades of tax-free compounding after the original IRA owner dies. That’s why they’re called Stretch IRAs.

Mr. Folk says he paid well over $1 million of tax to carry out his plans by converting the accounts for his grandchildren, ages 10 to 14, from traditional IRAs to Roth IRAs. That way, he wouldn’t have to take withdrawals while alive, and his grandchildren’s required payouts could be tax-free.

Now Congress may throw a wrench in Mr. Folk’s planning. The House of Representatives has passed a bill reducing Stretch IRAs to a maximum of 10 years for heirs like Mr. Folk’s grandchildren. ...

“IRAs are for retirement security. They are not wealth succession management tools, and I think we’ve now got the policy right,” Rep. Brady said in late August. ...
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Old 09-30-2019, 09:36 AM   #7
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Try this link.... works for me. https://www.wsj.com/articles/plannin...st-11569576614

Odd article though... the main protagonist has made Roth conversions and made his grandchildren the beneficiaries of the Roths and is upset that the stretch IRA might be eliminated. So his beneficiaries will have to withdraw from the Roths within 10 years rather than a longer period... a minor blow IMO... the grandchildren withdrawals will still be tax-free since they are in a Roth.... so the beneficiaries will only get a decade of tax-free compounding rather than 4-5 decades.
It's still behind a paywall for me. But thank you for including a relevant quote. Very helpful.
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Old 09-30-2019, 11:16 AM   #8
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Now Congress may throw a wrench in Mr. Folk’s planning.
I wish someone had written an article about me every time this has happened. I'd have used up my 15 minutes for sure.
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Old 09-30-2019, 12:27 PM   #9
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As Mr. Folk is a grandfather I suspect he would prefer the existing distribution rules grandfathered. I must agree as in general retroactive rules changes are vile.
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Old 09-30-2019, 12:57 PM   #10
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It's still behind a paywall for me. But thank you for including a relevant quote. Very helpful.
You might try this.... Type "Planning to leave an IRA to the grandkids?" in google and then select the first link.
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Old 09-30-2019, 01:07 PM   #11
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from the article:

"There are similarities and differences in the House and Senate proposals. Both allow the stretch for a large number of 'eligible' heirs. These include surviving spouses, disabled or chronically ill heirs..."

one could drive a truck through that loophole.
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Old 09-30-2019, 01:18 PM   #12
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from the article:

"There are similarities and differences in the House and Senate proposals. Both allow the stretch for a large number of 'eligible' heirs. These include surviving spouses, disabled or chronically ill heirs..."

one could drive a truck through that loophole.
My guess is that the statutory wording and any corresponding regulations will be specific enough to be more restrictive and reduce the size of the truck that can be driven through.
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Old 09-30-2019, 05:40 PM   #13
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You might try this.... Type "Planning to leave an IRA to the grandkids?" in google and then select the first link.
It's still behind a paywall. Is there a reason it shouldn't be?
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Old 09-30-2019, 05:48 PM   #14
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As Mr. Folk is a grandfather I suspect he would prefer the existing distribution rules grandfathered. I must agree as in general retroactive rules changes are vile.
Sure he might prefer that the rules were grandfathered. But retroactive? I don't see anything retroactive in the proposed changes.

Planning on everything remaining the same forever is unrealistic. Change happens. It always has. It always will.
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Old 09-30-2019, 06:00 PM   #15
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It's still behind a paywall. Is there a reason it shouldn't be?
No... in fact I was quite surprised that I was able to access the whole article.
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Old 09-30-2019, 06:11 PM   #16
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No... in fact I was quite surprised that I was able to access the whole article.
Thanks. There used to be a workaround for it, but it no longer works. I wondered if you'd stumbled onto something that did.
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Old 09-30-2019, 06:26 PM   #17
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The iOS NEWS app let me view it.

Congress aims to curtail Stretch IRAs, which pass on decades of tax-free growth to young heirs; ‘the government is breaking its promise to me.’
Joseph Folk feels betrayed.
Mr. Folk, a 72-year-old retired middle manager for railroads living in Norfolk, Va., is a rigorous saver. He says his two cars are 14 and 24 years old—“and they run fine”—and he hasn’t bought any new clothes in years.
A decade ago, after providing for his wife and two children, Mr. Folk decided to extend the life of his savings by arranging for his four grandchildren to inherit individual retirement accounts, or IRAs, each worth more than $1 million.

Thats less than 15% of the write up.
The more changes like this have no consequences for its legislators the more it will reach & continue.

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