Saving for retirement is a goal many people set. It’s a way to secure and safeguard a portion of your income to guarantee a comfortable living for your retirement years. Most people save for retirement using a vehicle known as an IRA. An IRA (individual retirement account) is an investment account with tax advantages created specifically for retirement. There are several kinds of IRA accounts including a Stretch IRA.
While not an IRA category like a Traditional, Roth, or Simple, a Stretch IRA allows you to extend the tax-deferred status of your IRA across multiple generations. When you establish a traditional IRA, minimum distributions must be taken by the first day of April after the IRA holder turns 70.5 years old. Often, these minimum distributions outlive the original account holder. When that happens, it may be beneficial to stretch a more traditional IRA.
A Stretch IRA lets your IRA pass from one generation to the next. There are specific rules that must be followed, however, to ensure there are no IRS excess-accumulation penalties. These penalties occur when you fail to make a minimum withdrawal in a given year. In addition, the major benefits of a Stretch IRA include its flexibility. Because it’s not permanently binding, the recipient can switch back to a more tradition IRA at their discretion. Stretching your IRA also allows your spouse to treat an IRA they inherit from you as if it were their own.
A stretch IRA extends the length of time you can keep assets inside your IRA to help them grow without new earnings being taxed as annual income. It’s important that your Estate Plan considers whether provisions for stretching an IRA are needed. At Grissom Law, LLC, we have the experience and expertise that you can rely on to ensure that your estate plan allows your beneficiaries to make the most of your remaining IRA. Our knowledge and skills can help maximize the tax benefits and retirement outlook for future generations with Stretch IRA provisions. Call us today to discuss your plan.
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This Blog/Web Site is made available for educational purposes only as well as to give you general information and a general understanding of the law, not to provide legal advice. By using this blog site you understand that there is no attorney client relationship between you and Grissom Law, LLC.