I’m back with another proposed change to the tax code pulled from the 2015 Federal Budget.
The current law states that a surviving non-spouse beneficiary under a tax-favored employer retirement plan may roll over assets to an IRA only by means of a direct rollover and that a surviving non-spouse beneficiary under an IRA may move assets to a non-spousal inherited IRA only by means of a direct trustee-to-trustee transfer. This is in contrast to a spouse’s ability to use a 60-day rollover.
The Budget author acknowledges that this difference between how a spouse may treat an inherited IRA vs how a non-spouse is forced to treat it “serve little purpose and generate confusion among plan and IRA
administrators and beneficiaries.”
You might think I’d consider this minor, but it really isn’t. It’s the only bit of code I’ve seen that was written simply to avoid the confusion contained in the original tax code. No change in revenue to the government save for a loss of the penalties it would otherwise have received. I wont hold any hope for this to set a precedent for more cleaning up of our incomprehensible tax code, but it’s there, it’s a start, and a kudo to whoever wrote it.