You have to keep a close eye on Washington, or before you know it, rules get changed and consequences can be severe for business sectors and consumers alike.
For a fleeting moment last week, it looked like the whole Stretch IRA concept was in danger of becoming illegal when some lawmakers went looking for a way to fund, of all things, a highway bill.
Senate Finance Committee Chairman Max Baucus (D-Mont.) proposed tougher requirements on inherited individual retirement accounts that would have required younger beneficiaries to pay taxes over five years instead of spreading them out over their lifetime — using the Stretch IRA concept. It would’ve raised an estimated $4.6 billion for the Treasury Department over the next decade, which Sen. Baucus wanted to use to help pay for a highway bill his committee is debating.
Under instant pressure about the proposal from Republicans, Baucus immediately said he would back off the effort to impose tougher requirements on inherited IRAs and said he would work with them to find replacement revenue for the highway bill. But he also hinted that Stretch IRAs could be in jeopardy again soon because he thinks the current law is being abused. Baucus told Bloomberg News in a Feb. 7 article, “IRAs are intended for retirement. They’re being used by some taxpayers to give tax-free benefits” to future generations… “Perhaps this provision and the subject can be taken up in tax reform.”
Yes, perhaps… (I say, like a parent telling his child “maybe” while having no real intention of ever saying “yes.”)