American IRA, A National Self-Directed IRA Provider, Announces The 2015 Budget Proposed By President Obama Targets Roth "Stretch" IRAs.

Share Article

The Roth Stretch IRA refers to the way required minimum distributions must be taken by individuals who inherit Roth IRAs. Self-Directed IRA holders and many others who have used this rule to pass their wealth on from one generation to the next will need to adjust their strategy if this budget proposal is approved.

American IRA CEO

American IRA CEO, Jim Hitt

The 2015 Budget Proposal may be bad news for those who have used their Roth account to provide for future generations. Self-Directed IRA holders are among the many that may be disappointed if this proposed budget is approved.

The 2015 Budget Proposal may be bad news for those who have used their Roth account to provide for future generations. Self-Directed IRA holders are among the many that may be disappointed if this proposed budget is approved.

To catch up those that may not be familiar with a Roth Stretch IRA. This term refers to a Roth IRA that has been inherited by an individual. Under current rules, the person who inherits the Roth IRA may stretch the required minimum distribution over their life expectancy. The proposed budget calls for the person who inherits the Roth IRA to take required minimum distributions over 5 years instead of stretching it over their life expectancy.

Many people may see this as no problem. The person who inherits the Roth IRA just gets their money quicker. While that may be true, there are many problems with this proposed budget rule for Roth IRA holders. This is where it gets interesting. As stated on page 16 of the proposed budget, the government intended for the Roth IRA to be a vehicle for middle class families to save for their retirement and many middle class individuals have indeed saved for their retirement with it. The sore spot this proposed budget intends to target is the fact that many people have gone beyond the goal of saving for retirement with it and instead have used the Roth as a tax shelter to build their wealth. In fact, many wealthy individuals have used the Roth as a vehicle to pass their wealth on from one generation to the next, in some cases, for numerous generations. This proposed budget would halt that practice as the inheritor would be required to withdraw all funds within 5 years.

In addition to proposing a 5 year required minimum distribution for those that inherit a Roth IRA, page 16 of the proposed budget also states "The Congress could pay for the remaining half of the Opportunity, Growth, and Security Initiative by enacting the President’s proposal to prevent additional tax-preferred saving by individuals who have already accumulated tax-preferred retirement savings sufficient to finance an annual income of over $200,000 per year in retirement—more than $3 million per person."

Click here to read the budget in its entirety.

About American IRA, LLC:

American IRA is committed to providing every client with gold-level service, regardless of account size. Experience their expertise through their certified IRA services professionals. Enjoy the value with one low annual fee of $285 with unlimited assets and unlimited account values. American IRA clients love the benefit of no charge for "All Cash" accounts. The performance of the American IRA staff is unmatched, with quick and efficient processing within 48 hours.

American IRA services thousands of clients and has over $300 million in assets under administration.

American IRA was built by investors for investors, and brings their successful investment experience to the table, providing excellent educational material showing the public that their Self-Directed IRA account can invest in a variety of assets such as real estate, private lending, limited liability companies, precious metals and much more.

American IRA is conveniently located in Asheville, NC and Charlotte, NC, and serves clients nationwide.

Share article on social media or email:

View article via:

Pdf Print

Contact Author

Sean McKay
@iraexpert
Follow >
American IRA
since: 02/2014
Like >
American IRA, LLC

Visit website