Originally posted on cuinsight.com.
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The Obama administration’s fiscal year 2015 revenue proposal would make significant changes to Roth IRAs. If implemented, these changes would make the Roth IRA a less attractive savings vehicle for many—and have a significant impact on credit union IRA programs.
The Administration has proposed “harmonizing” the required minimum distribution (RMD) rules for tax-favored retirement accounts that would—in a game-changing move—subject Roth IRAs to the same RMD rules as Traditional IRAs. The proposal would require Roth IRA owners to begin receiving RMDs in the year that they attain age 70½, eliminating one popular reason for converting a Traditional IRA to a Roth IRA: to avoid RMDs. It also would diminish the amount of assets Roth IRA owners would be able to pass along to their heirs—tax free—in a Roth IRA.