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Author: BruceCM Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75832  
Subject: Re: RMDs for Roths? Date: 3/12/2014 2:05 PM
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The default rule is that all funds must b out withing five years after the year of death; the "Stretch" is the exception, and it requires commencing the RMDs by the end of the first year after the year of death. What percentgage actually do so?

The 'default' to the 5 year rule for individuals ended several years ago, and would only apply to those TIRAs where the owner died prior to his/her required beginning date.

For our clients IRAs are relatively large and so we are definitely NOT seeing a representative cross section of all TIRAs. But the 'stretch' is the rule for beneficiaries...or at least that's how they are counseled. Generally, the smaller the IRA balance and the younger the beneficiary, the more likely are withdrawals to exceed the RMD. But for working adults who are beneficiaries and don't require the income, it usually makes little sense to increase your AGI by 5 and 6 figure in one year for no reason...other than moving money out of a tax deferred account to one whos realized gains will be income.

For these individuals, making an inherited IRA, regardless of the age of the owner at death, subject to the 5 year rule would substantially increase AGIs and tax bills.

Something tells me this proposal was dead as it left the administration's office suite.

BruceM
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