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Author: inparadise Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76420  
Subject: Another Reason to Keep Fund in Taxable Date: 3/9/2014 8:48 PM
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Accounts vs TIRAs

http://www.fool.com/retirement/iras/2014/03/08/how-proposed-...

Plans festering to make inherited IRAs be cashed in within 5 years. So far, gov't can't make you cash in stock. I prefer to pass on controllable assets if I have to pass on any.

IP
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Author: 2gifts Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 74470 of 76420
Subject: Re: Another Reason to Keep Fund in Taxable Date: 3/10/2014 9:25 AM
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Plans festering to make inherited IRAs be cashed in within 5 years. So far, gov't can't make you cash in stock. I prefer to pass on controllable assets if I have to pass on any.

IRAs were never intended to go forever without being taxed, and so it looks like they are trying to ensure they get those taxes sooner rather than later. You do get a tax deduction when those contributions are made, and so are delaying the taxes, but your comparison to the stock is faulty. The government doesn't care how you hold your after-tax assets because they already taxed those dollars. Similarly, they are looking for the taxes on the tax-sheltered money sooner as they don't want it to be sheltered forever.

It's not really "controllable" assets that you are talking about passing on. It is the difference between those that have been taxed already (in your taxable account) and those that have not yet been taxed (the deductible IRA contributions).

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Author: inparadise Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 74474 of 76420
Subject: Re: Another Reason to Keep Fund in Taxable Date: 3/10/2014 10:52 AM
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It's not really "controllable" assets that you are talking about passing on. It is the difference between those that have been taxed already (in your taxable account) and those that have not yet been taxed (the deductible IRA contributions).

I am, but perhaps I did not explain myself well. I have an inherited IRA and love that I only have to take RMDs from it. Several of my siblings simply cashed it out and paid the tax on the whole IRA at the time, which also is an option I retain if I so chose. So with my inherited IRA I can control when I take the tax hit or not, apart from the small annual RMD. It would have been a huge loss for us if I had to cash it out within 5 years of Dad's passing, which thanks to bonuses were unusually high earning years for us. The stock I inherited from Dad was cashed in at death and with stepped up basis a tax free check came to me. I have invested that cash in a way that I control when I want to take a tax hit on it's gains. And it will be interesting to see if in the pursuit of keeping all IRAs the same, Obama will propose the 5 year cash in for inherited Roths as well, just as he now wants RMDs on Roths, which have of course already been taxed.

I don't begrudge the Gov't it's taxes, but I will do my best to legally minimize what I give them. That works best for me if I can retain control of when I withdraw funds and pay those taxes. I get it that they are looking to close a loophole, (though not really getting the reason for the proposed changes to the Roth,) but all that means is that I will have to look for the next best strategy.

Rules change...stay nimble.

IP

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