Stretch or "Inherited IRA"

The Stretch or Inherited IRA allows the owner of an IRA to leave it to his or her heirs allowing them to take advantage of a very powerful option: that is, to "stretch" the distribution and, therefore, the taxes, of the inherited IRA over the lifetime of the recipient beneficiary.

Clearly if the recipient has the choice of having to pay tax immediately on an IRA they inherit or stretch that tax over 30 years, the choice is clear. By choosing to stretch the tax impact or the dissolution of a Roth IRA over a longer period, allows the recipient to use money to grow their retirement that would have otherwise been paid in taxes.

That way, they'll use the government's money to generate interest for themselves.

With a Stretch or Inherited IRA, provided you follow the rules, the government allows most of your clients' retirement money to exist either tax-deferred or tax-free for their lifetimes. That's right, if the client names the right beneficiary for their retirement accounts, the beneficiary can continue to grow their ancestor's retirement accounts and defer the taxes for decades after the ancestor has gone This action will potentially grow a small retirement account into a fortune. Of course, based on their life expectancy, your beneficiaries will have to take a small taxable distribution each year (Code Section 408(d)(3)(c )), but the bulk of the money grows without tax.

However, to be eligible for this tax-deferral you must name the right beneficiary. For example, if you have four children and you want to make sure each child receives a fourth of your retirement account (Code Section 401(a)(9, all you have to do to take advantage of the inherited IRA, is to name them as the beneficiaries. There are only three other things that need to be addressed:

By taking advantage of the "Stretch IRA" you will be helping your heirs by passing them a powerful wealth building tax-deferred savings vehicle.

Call our 866.818.4472 number to learn how to designate your heirs as beneficiaries so that they can get the benefit of a "Stretch IRA".

Spouses who inherit a "Stretch IRA" can consolidate it with their own IRA(s). Non-spouses (e.g., children) who inherit a "Stretch IRA" may not consolidate it or merge it with other IRAs. An existing Stretch or Inherited IRA may be moved from one institution to another at any time. Non-spouse Inherited IRAs, will maintain the name of the original owner followed by the beneficiary's name on the account.