“stretch” IRA

Submitted by Brian Dobbis on Mon, 2017-02-13 16:49

A piece of retirement legislation, Retirement Enhancement and Savings Act (RESA), contained a provision to shorten post-death distribution periods (stretch) – In short the “stretch” will be compressed to a 5-year maximum payout for most non-spouse beneficiaries; although certain exceptions will apply

Question – does the proposal to shorten the “stretch” include Roth IRAs? I’ve read countless articles and not one specifically references Roth. Is can’t seem to get a definitive answer.

https://www.finance.senate.gov/imo/media/doc/Retirement%20Enhancement%20Savings%20Act%20of%202016%20Summary%20.pdf

Thank you



Submitted by Alan - IRA critic on Mon, 2017-02-13 18:18

It should include Roth IRAs. Roth IRAs fall under 408A, but for Roth beneficiaries the post death rules of 401(a)(9)(B) apply and that is the section of the code being amended for the 5 year rule.



Submitted by Ben Meyer on Wed, 2017-02-15 01:08

  • The proposed RESA bill included all traditional IRAs, Roth IRAs, and qualified defined contribution plans owned by a decedent.  The limitation to the stretch would apply to the portion of the plans that exceeded $450,000 as determined on the date of death.  There was no indexing for inflation.  The bill didn’t pass, but may be introduced again, considering that it was unanimously approved by the Senate Finance Committee last year.
  • See this previous thread that discussed the Resa bill further:

 https://irahelp.com/forum-post/27780-resa-introduced-us-senate   



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