Return to Article: Tax Changes: Part One

By Tammy Flanagan National Institute of Transition Planning August 18, 2006
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    Refering to an article entitled Tax Changes: Part One, dated Aug 18, 2006; Paragraph: Tax Break for Beneficiaries Does the Pension Protection Act of 2006 (H.R. 4), allow non-spouse beneficiaries to reinvest inherited funds from a TSP account into their own IRA and avoid paying any taxes until the beneficiary makes a normal withdrawal after reaching age 59 ½. As I understood, the previous rule required non-spouse beneficiaries to withdraw the entire inheritance and pay the income tax within one year of the retiree's death. The current IRA rules require the non-spouse beneficiary to make minimum yearly withdrawals based on the beneficiary's life expectancy (not the deceased retiree's life expectantcy). The IRA beneficiary cannot just leave the inherited IRA funds in the IRA until he reaches 59 ½ or 70 ½.

    Thomas Murphy Posted December 28, 2007 6:13 AM

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Tax Changes: Part One
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