Stretch IRAs no longer targeted in Senate highway-funding bill

Distributions from inherited Individual retirement accounts can continue over a lifetime

Jul 11, 2014 @ 10:53 am

By Mark Schoeff Jr.

People who inherit individual retirement accounts can continue to hold onto them indefinitely, with the congressional threat of curbing the ability to take distributions over a lifetime abating for now.

The Senate Finance Committee dropped the so-called stretch-IRA provision from the nearly $11-billion highway-funding bill it approved on Thursday. The move came hours after the House Ways & Means Committee passed its own measure of just about the same size without the stretch-IRA provision.

In the original draft of the Senate measure, Senate Finance Committee Chairman Ron Wyden, D-Ore., included a provision that would require the distribution of IRAs within five years of the death of the account holder, with some exceptions. A committee summary of the bill said that accelerating the taxes paid would raise $3.7 billion over 10 years. Under current law, distributions can be stretched over the life of the beneficiary, which can be many years, if he or she is young.

Both versions of the bill now instead rely on other measures to raise the money required to replenish the Highway Trust Fund, which could start running out of funds in August and threaten hundreds of road projects and thousands of jobs. The House and Senate bills raise money through an extension of custom user fees, adjusting the amount of money companies have to contribute to pension plans and transferring gas-tax money from an underground storage account to the highway fund.

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