Somehow these proposed changes caught me by surprise, and they are set to go into effect within a year or two given the bipartisan support they have received. Hadn’t heard anything about the proposed changes to inherited IRAs, beneficiaries will be required to cash out balance within 10 years instead of taking distributions based on their age. Other changes: End of age limit for retirement contributions and age of required distributions raised to 72.
https://www.forbes.com/sites/bobcarlson/2019/05/26/congress-is-making-big-changes-in-retirement-planning/#6c2a8328227d
Thank you for posting @momsquad , I had heard about some of this, but hadn’t heard about changing the inherited IRA rules, or the proposal to change the required withdrawal age.
Been waiting for this change.
Interesting. I’m currently drawing from an inherited IRA. I wonder if current holders will be grandfathered in the present estimated lifetime distribution, or if we’d be changed to the 10 year rule.
We are also drawing from an inherited one. However, since DH is retired and we are drawing from his IRA, it would be a wash for us, tax wise.
Hmmm, hadn’t been aware of that. Thanks for the alert. Not sure how that will affect us—I guess I can contribute to my IRA for longer if it passes and may not have to withdraw as soon.
The age change just got mentioned at work last week, will impact notifications from financial services companies about required minimum distribution withdrawals if it takes affect.
Thanks. It looks like we’ll have to change our trust. Kids will be happy.
Selfishly, I don’t like the proposed change to the Stretch IRA. Bah Humbug.
Why push the RMD age to 72 (or even 75)? I guess that works in my favor but all it does is cut down on tax revenue… or postpone tax revenue.
Maybe the government hopes that money will be taxed at a higher rate after it is inherited (no stretch IRAs anymore)… 
They are getting that tax rev back by shortening the beneficiaries’ distributions. (Some of our kids will be in their prime working years – and max tax rates — when we pass along.) The article I read said that this is a net revenue raiser over 10 years.
The good news is that enables two more years for conversions of tIRA to Roth.
I think the logic is that many people are still working at 70 or older, and don’t need the money. And it will allow people to have more left in their older years.
I am actually in favor of eliminating the stretch provisions, especially if it applies to Roths as well. IRAs were created as retirement vehicles, and have been warped into estate planning devices for rich people. Get that money out of tax-deferred accounts and put to use creating taxable income.
The rest of the changes are fairly inconsequential IMO.
There was a much more informative article in the Journal late last week. Unfortunately, access is limited to subscribers.
"To help pay for the changes, the House legislation would require many people who inherit tax-advantaged retirement accounts after the end of this year to withdraw the money over a shorter time frame than many are currently allowed—specifically, they would have to drain the accounts within a decade and pay any taxes due. The bill exempts some beneficiaries, including surviving spouses and minor children.
Currently, beneficiaries can often liquidate those accounts over their own lifetimes and stretch out tax payments, a technique known as the “Stretch IRA.” This change is expected to generate $16 billion in additional revenue for the government over the next decade, according to the congressional Joint Committee on Taxation."
Missed this paragraph when I skimmed the article last week.
The bill that passed Thursday also repeals a 2017 change to the so-called Kiddie Tax that often boosts tax rates on “unearned” income received by children in low- and middle-income families and was causing surprise tax increases for many. The measure allows affected taxpayers, including thousands of families of deceased active-duty service members, to retroactively elect not to pay the tax. It would also benefit survivors of first responders, children who receive certain tribal payments and college students receiving scholarships.
The inclusion of the Kiddie Tax changes helped accelerate the retirement bill through Congress, because lawmakers were eager to resolve a problem for military families before Memorial Day.
The changes to the inherited IRAs will be addressed by estate attorneys and how individuals choose to fund and use their IRAs. Tax changes alway spur ingenuity on the part of attorneys and accountants. Glad the changes aren’t retroactive though so people can plan accordingly.
Somewhere in this bill is the ability for grad students to count stipends as “earned” income for purposes of making ROTH retirement contributions. Would love for this to happen since doctoral student D can only match what she is making in part time job and since contributing very little to SS at this point that would be big.
Also idea that can take 10k I think as qualified disbursement from 529 to pay back student loans.
I’m pretty sure there is a difference in house and senate versions so only time will tell what’s in the final bill. Btw my parents would have loved to delayed RMD from their ira. Even now my dad hates to take it. They (fortunately) don’t need it. What I read about short ending the time for disbursements for inheritances has to do with getting that wealth taxed sooner which helps fund the bill (?)
Hmm, I am taking my first RMD this year. Wonder if it applies to me.
@CT1417 , Thank you for the added information from the WSJ.
Lots of good news for improving retirement prospects for younger workers, especially those in traditionally low paid jobs. Most part-time workers will put in at least 500 hours per year, and under this proposal they will be given the option of 401K participation after 3 years. After the long failed trial of 401Ks for the masses it appears the trend is to bring back key features of pensions.
@oldmom4896 sounds like you should be safe because the law isn’t effective yet. It will apply going forward.