Inherited IRA News

Information Current as of: 
March 2nd, 2020



-- HOT! HOT! HOT! --

December 20th, 2019

IRS Hand Out

Well Congress More or Less Killed A Stretch Inherited IRA Account for Non Spouse Beneficiaries.  Most will have only 10 years to take all the money out.

(Became law in December and affects all IRA owner deaths as of January 1st, 2020.)

May 12th, 2016

Inherited IRA May Die?

Will Your Inherited IRA Be
Declared Dead Soon?
With multiple budget proposals by the Obama administration that call for the death of the Inherited IRA account as we know it, we are operating on the risk of a big change.

However, no budget proposal of Obama has ever been passed and implemented, so the odds of the curtailing and eventual death of this fantastic product/procedure have been greatly exaggerated and published by media sources who tell you the risks which are real.

But may ignore the reality that America likes the idea of stretching out deceased family member retirement money over their own life expectancy (and sometimes, even their children's) without that sudden tax blow coming down from a congressional hammer.

So stay tuned...

June 26th, 2015

Over The Rainbow

June Is A Hot Month For Big Supreme Court Rulings!

Back to back major rulings affecting IRA accounts has taken place by the U.S. Supreme Court rulings. On June 26th, 2015, the Supreme Court voted 5-4 on the Obergefell v. Hodges case, affectively declaring the law of the land to redefine marriage.

This re-definition of marriage now includes all same sex married couples in the definition, upending states rights to determine their own definitions.

I don't know if this puts us somewhere over the rainbow or the end of states rights as we know them. And, I personally strongly disagree with the ruling and find it a grave mistake for multiple reasons.

But, I must adhere to the edicts that have come from this decision and yes, I am personally aware of clients and friends, and future clients who may now also be affected directly or indirectly by this ruling.

So, the bottom line is all of the IRS law and rules pertaining to married couples and all the content on this site mentioning married couples and surviving spouses is now inclusive of the LGBT individuals and families newly affected by this change.

June 12th, 2014

Inherited IRA--Big News!!!

Supreme Court Removes Bankruptcy Protection For Inherited Retirement Accounts

 Supreme Court Ruling

A Supreme Court Ruling June 12th, 2014 pretty well makes it mandatory to obtain professional inherited IRA help BEFORE you do anything.

Back in June, in the Clark v. Rameker court case taken to the Supreme Court, it finally was determined that inherited retirement funds DO NOT have the same protection as regular IRA type accounts still owned by the original account creators.

There are plenty of new questions this ruling brings in bankruptcy law, estate planning, etc.  One clear fact is that it shows a surviving spouse would be SMART to put the former spouse's IRA or 401-k plan into their own name now, so the legal reach of this determination can not remove bankruptcy protection for those inherited funds.  Yet some even question if a spouse can still do that and be exempt from creditors thereafter.  (I don't support that view)

Advisers Proceed With Caution Article

By putting the funds into an inherited IRA in cases where the surviving spouse is under 59 1/2 and wants withdrawals without the 10% penalty applying -- it is clear that it would remove valuable creditor protection. 

Also disclaimer activity could be deemed an illegal conveyance in bankruptcy court according to popular CPA and IRA expert Bob Keebler.  So, be sure to get professional advisory on ANY larger type IRA account BEFORE you make a move. 

Noting:  Some states had bankruptcy protection secured by prior court rulings.  Whether those former rulings have any weight now, will have to be determined in future court cases. And I will keep you updated as they happen.

Read more about the unanswered questions this ruling brings up at:

The Fastest Way To Lose an IRA

And to review the actual Supreme Court ruling:

Actual Supreme Court Case

March 5th, 2014

The 2015 Federal Budget Reveals...

the "Same 'ol Samo!"

Basically, a "redo" applies to all the failed retirement plan changes put in the 2014 budget, which failed to be implemented.  (Six out of seven anyway)  The one that concerns our firm the most is the restating of giving non spouse beneficiaries just five (5) years to remove the money and pay the taxes on it.

Since we work with $50,000 - to over 2 million dollar Inherited IRA account beneficiaries, this could become a drastic tax burden on the heirs, especially when there is only one child or beneficiary.  "Cruelty" is the best word to describe the intent behind these proposals...   M.D. Anderson

Cruel Tax Rules

Click Here or the Picture Above

 to Get Ed Slott's Opinion (CPA and IRA Expert) 

December 2, 2013

Wisconsin Cheese Money Showdown

Wisconsin Cheese

Actually, it has nothing to do with cheese. But, that may be all a family in Wisconsin may have left if the Supreme Court rules against them when the case comes up for review as soon as January 2014.  

A previous circuit court was split on whether inherited IRA's are or are not IRA's after you die. (IRA's are commonly known as bankruptcy asset survivors you get to keep)  It may be the end for inherited accounts to be protected in America from creditor reach. 

My Tax Opinion?  When does an IRA not become an IRA, just because it was inherited by someone else? Does an inherited home become a car?  An inherited bank account become a mutual fund account?  It is still under the same IRS TAX rules folks...

I hope they determine these precious IRA dollars can be kept.  300k is a lot of money to rebuild a life... 

Full Story Link:  

July 12, 2013

The Inherited IRA Battle Has Begun...

Inherited IRA Battle Begins

From Forbes Personal Finance Online:

Click Link Below To Read Article

4 Steps To Take Now That Stretch IRAs Are Endangered

(Note: It will take a lot of polish to ever pass...)

April 13, 2013
It's Back!
The politicians couldn't leave it alone. Now, they have proposed in the 2014 budget to force your inherited IRA into a maximum 5 year forced payout.  Yes, grandfathering is included for those being set up on current deaths that take place prior to it becoming law.  BUT FEW KNOW IT IS ONLY FOR YOUR LIFETIME! Even if your account gets grandfathered -- Your heirs get the same 5 year treatment in this proposal!

And of course, there is more bad news...  they also feel they can determine just how much money you should be allowed to accumulate in your retirement account (of any kind mind you). If it is more than approximately 2.5 million -- this new proposal may shut down your account for any amounts over that figure!

Read More from Wall Street Journal Article Published today:  LINK

January 2013
A New Year and a New 401(k) Government Program - Let's Make a Deal!

Government 401k to Roth Offer

No end is in site for a workable plan that fixes the current increasing US debt problem.   This risks everything we hold dear and true and frankly, it risks the things we enjoy,  the liberties and freedoms we treasure.  Drastic changes may be coming very soon. 

The new law has a deal for you.  You can now convert your 401(k) plan at work (Also 403b's, thrift savings and 457(b) plans too) to a ROTH IRA and you don't have to sever your employment or retire. Yes, you can right now, convert some or all of your employer sponsored and send the money C/O U.S. Treasury! 

Many financial writers have already published reasons to take the "deal" on the Roth conversion.  It's not for everyone.  Letting your traditional IRA just become an eventually taxable inherited IRA at your death makes a lot of sense.  Investing in real estate as a "hard asset" also makes a lot of sense.  Keep your cash in your pocket -- you never know when you may need it for.  

Missed Your RMD for Last Year?

Well, they have another deal for you.  You can get out of trouble as long as you tell your custodian to transfer the money to your favorite charity.  You've only got until January 31st, 2013, to count for 2012 tax year.

Fall 2012

There is NO big new news other than continued attempts by our elected national officials to revive former proposals that go back to 2008.  None of this proposed law is really necessary and some is confiscatory in nature to say the least. We are watching closely expecting something to "hit" most likely right after the election. Or if the government gets desperate for operating capital - even before the election!

June 22, 2012

IRS Now Putting Focus On IRA Account Mistakes

The news is out -- the IRS has to report to the Treasury Department by October 15th of this year. Treasury wants to know ways to raise revenues by going after penalties and interest not currently being paid by IRA owners. 

The IRS has discovered they have been losing billions from collection activities by faulty systems, bad advisers, or just unaware IRA owners of when and what you can put into an IRA as well as take out of an IRA account.

Though this information covers ALL IRA's, the fact is that Inherited IRA's  type accounts are the worst for mistakes waiting to happen. Screw ups are legendary as you will find on this information website.

So the warning this month is real. Don't ignore the reason why major publications and news articles have all clearly stated that if you have recently inherited an IRA account as a designated beneficiary, hiring an expert is mandatory!

Read more about it from this excellent article from Wall Street Journal reporter, Kelly Greene:

IRA Rules Get Trickier

(Published Online June 22, 2012/Print edition June 23, 2012, page B7)

February 2012

Congress is trying to stop the "stretch-out" on FUTURE Inherited IRA's!

The stretch IRA may die at least for non spouse heirs.  Unless they are disabled.  (all kinds of qualified retirement plans eventually become eligible and are known as an inherited or beneficiary IRA at death if not cashed in) 

In other words, most people would be barred from any long term stretch out of income and tax deferral beyond 5 years in this new proposal. Though it has been verbally stated the provision will be removed from the pending transportation bill by the congressman that put it in there in the first place, it still remains as part of one of two proposals! (house and senate versions)

Senator Baucus states it won't become effective January 1st, 2013 for decedent deaths after that date. IF HIS WORD IS GOOD! However, as our graphic shows -- the end may not be far away. The cat is out of the bag. The juicy billions of extra taxation money this proposal could generate will not be easily forgotten.

Just as it is slipped on top of the back of a bill that really has nothing to do with estate or financial planning, it will come back again I am afraid. And, that is why you want to spend a little time consulting with our firm to make sure you know how to get your inherited accounts set up properly before any proposal like this actually does become effective.

For the many we have already helped, the good news is great news. YOU WILL BE GRANDFATHERED! (well in at least the provision proposed that they are pulling back out -- or are supposed to pull back out.) 

Confused?  Don't be. Read our site content and then set an appointment to chat by phone, in person, or by SKYPE. This is extremely important, especially for those thinking of cashing in inherited accounts this year. DON'T!!!  Not before you understand the value of establishing an inherited IRA while you still can. (You would then have the rest of your life to cash it in or take RMD (required minimum distributions) or any other amount you desire, while protecting the balance from instant taxation)

M.D. Anderson

Call me for Free: 1-800-782-2806


Disclaimer: The information contained on this inherited IRA information site, though deemed reliable and accurate, is solely the opinion and statements of the adviser profiled. Therefore, it should be considered "general" in nature and no action should be taken based on this information until such time your specific situation and circumstances can be reviewed and analyzed by competent and qualified tax, insurance, legal, and/or other financial advisers. This information is not intended, nor should be construed as legal advice. FSI can not and will not give you legal advice. If you need legal advice, we can refer you if you desire and request it. Founded in 1990, FSI is a long-term Financial Advisory and Arizona domiciled Corporation now providing services nationwide and in some foreign countries. Services profiled herein are available unrestricted to Arizona residents. Residents outside of Arizona are eligible for certain consulting services and to legal (lawyer) referrals by our firm when requested of us. For Arizona residents, communication with an Arizona Certified Legal Document Preparer (AZCLDP) are private and confidential but are not "privileged", such as they would be with an actual Lawyer.

Besides being a licensed  Arizona Certified Legal Document Preparer, Mr. Anderson serves as an associate of an international law firm. He also is an Arizona Professional Accountant/Consultant and licensed IRS registered tax preparer and ERO (Electronic Return Originator) agent/firm. He also is an Arizona licensed Professional (Realtor®)/consultant) with Realty One Group and a licensed Professional insurance agent and corporation for life, health or annuity sales.  Inherited IRA accounts have many options you may not be aware of, including alternative "hard asset" type investments. Let M.D. show you the the options your current banker, broker or insurance agent may still be hiding from you!

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