Legacy MattersA big problem with inherited 401(k)s has just been solved with legislation signed yesterday by President Bush.
Heirs who aren't spouses can now roll over retirement accounts into their IRAs.
Wall St Journal Tax Report
Congress's Joint Committee on Taxation estimates the change will save taxpayers about $291 million over the next decade alone. But be careful: The new law is effective only for distributions made after the end of this year.
"In my 20 years of practice, I have seen dozens of families and tax advisers who would have benefited" from the new provision, says Robert S. Keebler, a certified public accountant at Virchow Krause & Co. in Green Bay, Wis. In most of those cases, a parent died, leaving retirement-plan money to a child who was forced, under the plan's rules, to withdraw money from the plan within five years -- and, in some cases, immediately, Mr. Keebler says in a new book from CCH, a Riverwoods, Ill., publisher of tax information.