Reply To: Please post an article on almost-repeal of the Stretch IRA

Home Fairmark Forum Retirement Savings and Benefits Please post an article on almost-repeal of the Stretch IRA Reply To: Please post an article on almost-repeal of the Stretch IRA

#3504
Alan S.
Participant

The solo K with real estate holdings would have to be directly rolled into a self directed inherited IRA for a non spouse beneficiary, and that of course could result in UDFI issues in the IRA. There is no death basis adjustment in any retirement accounts but that would not matter for the Roth assets which should be qualified and tax free, except for UBIT related issues for which the inherited IRA must directly pay any taxes.

A surviving spouse cannot own an inherited 401k, but if that spouse will continue the business they could elect ownership of the inherited IRA and then roll it into their continuing solo K if the plan accepts IRA rollovers. I don’t think this two step process can be abbreviated by avoiding an inherited IRA. If the surviving spouse closes the business, the solo K will have to be terminated within a few months and a 5500 filed.

Given the provisions of bi partisan tax bills both limiting the non spouse stretch in various matters, the eventual beneficiaries need to be aware of the potential developments. Looks like the provisions will end up decided by a conference committee. The amount each beneficiary receives may or may not be factor in determining their eventual stretch.