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Sadly also making inherited IRAs be drained within 10 years. Hope that gets changed. Certainly not conducive to improved retirement savings if the inherited IRA has to be drained that fast.

IMO the faster drawdown of inherited IRAs will make Roth conversions all the more important for those of us who expect to pass on IRA money to the kids.


Converting the money from a Traditional account into a Roth account before passing it on will just have the effect of having the original owner pay the taxes sooner instead of the beneficiaries paying taxes later. It won't negate the requirement to drain the account within 10 years, since Roth accounts are 'tax-advantaged' too. From the explanation of what the bill "means to you" https://www.wsj.com/articles/what-does-the-house-retirement-... (with my bolding):

If you inherit an IRA
You’d no longer be able to liquidate the balance over your lifetime and stretch out tax payments. Instead, if you inherit tax-advantaged retirement accounts after Dec. 31, 2019, you must withdraw the money within a decade of the IRA owner’s death and pay any taxes due. Exceptions include surviving spouses and minor children.


Net-net - by moving the money out of the tax-advantaged accounts sooner, the new rules will have the impact of providing tax revenue sooner, rather than later, so that Congress can spend more now.

I for one really hope this doesn't pass the Senate as it puts our kids in a more compromised position for retirement than we had hoped to leave them in.

Because of the revenue impacts, I doubt this will change. Congress is trying to mitigate the revenue impacts of the tax-advantaged accounts without having to do something more blatant like means testing.

AJ
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