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Subject Topic: stretching the IRA’s life Post ReplyPost New Topic
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usasmokingsale
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Matrosen-Obergefreiter


Joined: 21 May 2019
Location: United States
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Posts: 74
Posted: 15 August 2019 at 08:26 | IP Logged Quote usasmokingsale

On a $1M inherited 401(k) this would mean paying $350,000
in taxes immediately, and the remaining $650,000 would be
outside of the tax-deferred environment. Inherited IRAs did
not have that limitation. An heir with a $1M inherited IRA
could take the necessary minimum required distributions and
maintain the money in the tax-deferred environment-
stretching the IRA's life. And the "stretch IRA" would
continue to grow tax-deferred, and could be worth $1M or
more over time for the non-spouse heir. Therefore, the best
tax advice used to be "roll the money into an IRA." The
Roll The Money Into An IRA Problem The reason people
resisted the advice and rolling the 401(k) into an IRA is
that many of these old 401(k) plans have a great fixed
income fund as one of their components
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. Many of these old fixed income funds are
paying returns in excess of today's fixed income or bond
funds and many of the old timers continue to have money in
these fixed income funds of their 401(k) 10 years or more
after they retire
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. The old law forced a choice between offering
the non-spouse heir the tax benefits of the stretch IRA and
the owner's interest in keeping the money in the better-
than-average fixed income fund in the 401(k)
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