Earlier this month, President’s Obama released his budget request for the Federal government for the coming 2016 fiscal year. Included in the budget are a long series of tax proposals, summarized in the so-called “Treasury Greenbook” that provides an explanation of each proposal and what it would entail.
While the tax proposals in this year’s budget span a wide range of categories and topics, the proposed retirement changes are significant, and include some good, some bad, and some that are downright ugly. This week, we review some of the good (eliminating RMDs for those with less than $100,000 of retirement assets and allowing inherited IRA rollovers for non-spouse beneficiaries) and the bad (Roth crackdowns including no more backdoor Roth contributions and new Roth RMDs after age 70 ½). Next week, we’ll look at the ugly, including the infamous proposed $3.4M “cap” on retirement accounts (which is actually far less restrictive than it has been made out to be in the media), and the potential elimination of stretch IRAs and Net Unrealized Appreciation (NUA) rules.
Of course, the caveat is that these tax proposals are just that – proposed – and most would require legislative action from Congress to implement... which may not happen anytime soon! Nonetheless, the proposals provide important insight into what the White House considers to be “bargaining chips” for tax reform going forward, which means there is at least some “risk” that they could be introduced into legislation (or attached to existing legislation) in the coming years!
