Members of Ed Slott's Elite IRA Advisor Group(SM) studied advanced-level case studies in Roth IRA recharacterizations and rollovers, avoiding excess contribution penalties and navigating inherited IRAs
It suggests how taxpayers and their advisers may nonetheless achieve a degree of asset protection from creditors for inherited IRAs
The Court found that retirement funds are funds "set aside for the day an individual stops working" and that three legal characteristics of inherited IRAs
indicate that inherited IRAs
do not contain retirement funds.
With the government discussing the elimination of inherited IRAs
, the elimination of stepped-up basis, and reductions in itemized deductions, wouldn't families benefit from a tax reduction strategy?
Beneficiaries also do not have the ability to defer distributions from inherited IRAs
or to rollover the balance to their own account.
RMDs arc due from inherited IRAs
beginning in the year after the original owner's death.
The court stated that while inherited IRAs
are exempt from taxes until distributions are made to the beneficiary, beneficiaries of inherited IRAs
are required to take distributions.
But, and this could affect millions of them, many boomers have inherited IRAs
that require the RMD each year, even though the inherited IRA
holder may be working and not need the withdrawal.
are treated with even more reserve, with only 8 of 18 firms providing detailed Beneficiary/Inherited IRA
Curtail "stretching" of inherited IRAs
The line of cases that deny exemptions in inherited IRAs
commonly conclude that inherited IRAs
are (1) fundamentally different from a traditional or Roth IRA under the Code and (2) lack a retirement purpose.
This transfer is deemed to be an eligible rollover distribution, allowing the nonspouse beneficiary to defer tax on the rolled-over portion of the retirement plan, subject to the minimum required distribution (MRD) rules for inherited IRAs
(see section 401(a)(9)).