Quote of the day

Loading Quotes...

2015 Federal Budget – 60 Day Rollover

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.

  • Dilip Sarwate March 18, 2014, 10:35 am

    In contrast to almost all of your postings, this one leave me thoroughly confused as to what you are saying. Is the 2015 budget _proposing_ that spouse beneficiaries as well as non-spouse beneficiaries of 401k/403b etc plans be allowed to use 60-day rollovers, thereby amending the current situation whereby only spouse beneficiaries may use 60-day rollovers (and you thinks this is a good idea), or is it the case that _you_ are suggesting to the tax code writers that all beneficiaries be allowed to use 60-day rollovers? Or are does the 2015 budget propose that _all_ beneficiaries be required to use the direct trustee-to-trustee transfer and you think this is a good idea, etc.

  • Joe March 18, 2014, 6:15 pm

    All beneficiaries can now use the 60-day rollover (if the budget passes). It’s a good idea that the code is adding this to reduce confusion.
    The original rules were so complex, apparently, even my explanation is not really clear.

    As always, thanks for visiting, and commenting.

Leave a Comment