         |
"Those who know the rules, keep their gold", Michael Smith
What Is a Stretch IRA?
Finding a method to leave a lasting legacy to your loved ones without increasing their tax burdens can be difficult and complicated. A “stretch” IRA may be a useful approach that can benefit your heirs for generations to come.
A stretch IRA is not a special type of IRA but rather a term frequently used to describe this IRA strategy, also known as a “multigenerational” IRA, that can be used to extend the tax-deferred savings on inherited IRA assets for one or more generations to benefit future beneficiaries.
Here’s how it works. You let the funds accumulate in the IRA as long as possible. You name as beneficiary someone younger, perhaps a son or daughter. When you have to start taking required minimum distributions (RMDs) from your traditional IRA after turning age 70½, you take only the minimum annual amount required by the IRS each year. (If you fail to take a minimum distribution, you could be subject to a 50% income tax penalty on the amount that should have been withdrawn.)
When your beneficiary inherits your IRA, he or she might also have the ability to take required minimum distributions (RMDs) based on his or her life expectancy. (RMDs are calculated each year and must begin no later than December 31 of the year following your death.) In this way, your beneficiary would have the potential to stretch the distributions over his or her own lifetime, which enables the funds to continue compounding tax deferred for a longer period and avoids a large initial tax bill. Your beneficiary can also name a beneficiary, who can potentially stretch the distributions even longer.
There is a limit to how long you can “stretch” an IRA. The IRS doesn’t want to postpone taxes indefinitely. The distribution period cannot extend beyond the first-generation beneficiary’s life expectancy. For example, if you designated your son to be the sole beneficiary of your IRA and he was 40 when you died (and you hadn’t yet reached the age for taking RMDs), he could take RMDs based on his 42.7-year life expectancy, starting the year after you died. If he died 20 years later, his designated beneficiary could continue taking minimum distributions based on what would have been your son’s remaining life expectancy (22.7 years).
Of course, nonspouse beneficiaries of IRAs face some hurdles. There are different sets of rules to determine the RMDs that a non-spouse beneficiary must receive. They depend on whether the original account owner died before, on, or after reaching the required beginning date for RMDs. Not only are these rules complex, but they can have far-reaching implications. Spousal beneficiaries of IRAs have more options than non-spouse beneficiaries.
If you have a desire to extend your financial legacy over future generations and don’t need the IRA assets for income during your lifetime, then this strategy may be appropriate for you. Because many tax and distribution rules must be followed, make sure to seek legal or tax counsel before making any final decisions.
Note: Make sure the provisions in your IRA allow beneficiaries to take distributions over their lifetimes and to name second-generation beneficiaries. Distributions from traditional IRAs are taxed as ordinary income. Distributions prior to age 59½ are subject to a 10% federal income tax penalty (this rule does not apply to IRA beneficiaries, who must begin taking minimum distributions no later than December 31 of the year following the original owner’s death). Beneficiaries also have the flexibility to take out more than the minimum distribution at any time.
 StoneWolfe Financial - Des Peres, MO 63131 Office Phone: 800-481-0819 Fax: (314) 317-8718 Cell Phone: 314-422-1125 Missouri Relocation, St Louis Real Estate, St Charles Real Estate, san louis o san bienes raíces de mo de charles, MO Homes For Sale, Home For Sale In St Louis MO, missouri home search, Top Missouri Realtors®, st charles real estate, Best Realtor in St Chalres MO, St Charles Real Estate, St Louis Real Estate, Best Realtor in St Louis MO,St Charles MO Homes For Sale Home Search, St Louis Mo Real Estate, Saint Charles MO Realtors®, Chesterfield MO Real Estate,o fallon home loans, top realtor in st louis st charles, ofallon home loans, St Louis MO REALTORS®,wentzville real estate, top real estate agents in lake st louis, Missouri Home Search, Relocating to St Louis Missouri,Saint Charles MO Homes For Sale, saint louis real estate, top st louis realtor,top st charles realtor, Saint Louis MO Homes For Sale home search, Wildwood Real Estate,Winghaven Homes, Turtle Creek Homes, saint charles missouri schools, bilingual missouri real estate agents, Canvas Cove Homes, Monticello Homes,Manchester ,O'Fallon MO Homes For Sale home search, O Fallon MO Home For Sale home search, Homes For Sale In O Fallon MO, St Charles Mo Homes Real Estate home search,St Louis Homes, Lake St Louis MO Homes, st louis missouri real estate agents, top st louis real estate agent, Missouri Mortgage Companies, St Louis County,find a home in st louis, Homes For Sale In Lake St Louis MO, Wentzville MO Homes For Sale, Missouri Homes For Sale, Homes For Sale In Wentzville Mo, Homes For Sale In Missouri, assit 2 sell,find a home in chesterfield, Chesterfield Mo Homes, Missouri Real Estate, real estate in st louis mo, st peters real estate, lake st louis real estate, 2 Sell St Louis, 2 Sell St Charles, Buying a home in Missouri, mo low commission real estate, Selling a Home In Missouri, Prudential Realtors®, ballwin real estate, Prudential Patterson REALTORS® st Louis Mo, st charles real estate agents,Prudentil Patterson St Charles MO, Prudential Patterson, Chesterfield Real Estate,REALTORS® O Fallon MO,#1 Listing Agent in St Louis, Prudential Patterson Relocation, Ellisville Real Estate,Chesterfield Mo Homes For Sale Home Search, Homes For Sale In Chesterfield Mo, st louis real estate agent, st charles home loans, Ballwin Mo Homes For Sale Home Search, Homes For Sale In Ballwin MO, Ellisville Mo Homes For Sale, Find Homes In St Louis MO, find a home in wentzville,mo discount realtors,Homes For Sale In Ellisville MO, Creve Coeur Mo Homes For Sale, top missouri realtor, Homes For Sale In Creve Coeur Mo, Town and Country Homes For Sale home Search, Homes For Sale In Town and Country MO, Missouri Sellers Agents,Town Country Real Estate ,Missouri Buyers Agents, St Albans MO Homes for Sale Home Search, Homes For Sale In St Albans MO, Wildwood Mo Homes, Homes For Sale In Wildwood MO, St Peters MO, Augusta MO Homes, Augusta Real Estate, New Melle Real Estate,# 1 st charles real estate agent ,Homes For Sale in New Melle MO, Sell My St Louis MO House, Sell My St Charles County home, Top Missouri Realtor.  
© 2008 Myers Internet, Inc. All Rights Reserved Powered by: Myers Internet, Inc. | Admin Login |