| Have you heard about a "stretch IRA" and
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| | plans.
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| wondered if it was some special kind of
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| IRA? Well, it isn't. In the simplest
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| | The distribution rules that come into
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| terms, a stretch IRA is an IRA that has a
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| | play at the death of the retirement plan
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| beneficiary designation that provides for
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| | owner are usually found in a plan
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| the possibility of maintaining the tax
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| | document that few employees or advisors
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| deferred status of the IRA after the
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| | ever read. Many, if not most plan
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| death of the IRA owner. You might be
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| | documents say that in the event of death,
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| thinking, "I wish I had a stretch IRA. I
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| | a non-spouse beneficiary must receive
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| only named my spouse as my primary
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| | (and pay tax on) the entire balance of
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| beneficiary and my kids as my successor
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| | the retirement plan the year after the
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| or contingent beneficiary." Well, guess
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| | death of the retirement plan owner. These
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| what? You have a stretch IRA. After your
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| | retirement plans don't allow a non-spouse
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| death, your spouse and/or your children
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| | beneficiary to stretch distributions. For
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| could continue to defer income taxes for
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| | example, if there is a $1 million
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| many years after your death, as long as
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| | balance, the non-spouse heir or heirs
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| they are prudent and only take the annual
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| | will have to pay income taxes on $1
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| minimum required distributions mandated
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| | million. Then, the remaining balance,
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| by law.
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| | roughly $650,000 ($1 million minus the
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|
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| | $350,000 immediate income tax hit) would
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| While the "stretch" concept applies to
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| | be outside of the tax-deferred protection
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| some retirement plans, many heirs of 401k
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| | of an inherited IRA.
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| owners could be in for a rude awakening
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| if their parents fail to plan properly.
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| | Had the 401k participants taken that
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|
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| | money and transferred it into an IRA
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| With proper planning you can put in
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| | before he died, the non-spouse
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| place the mechanisms to stretch taxable
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| | beneficiary would have been able to
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| distributions from an inherited IRA and
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| | stretch the distributions based on his or
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| certain retirement plans for decades,
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| | her life expectancy. Failing to make the
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| sometimes as long as 80 years after the
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| | IRA transfer will result in an
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| original owner dies. If, however, the
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| | unnecessary massive income tax burden for
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| employer's retirement plan document
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| | the non-spouse beneficiary.Top IRA expert
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| stipulates the wrong provisions, the
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| | and author of Retire Secure!, James
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| stretch may be replaced by a screaming
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| | Lange, can keep you from jeopardizing
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| income tax disaster. The heirs could be
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| | your family's security. He has developed
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| in for a tax nightmare if Dad never
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| | tax-savvy retirement and estate plans for
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| transferred his retirement plan into an
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| | over 1400 U.S. citizens with appreciable
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| IRA.
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| | assets in their IRAs and 401(k) plans.
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|
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| | Boost your family's financial security
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| Many investors fail to realize that the
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| | with a regular dose of great information.
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| specific plan rules that govern their
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| | Sign up for his monthly Retire Secure
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| individual 401k or other retirement plan
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| | newsletter at Sign up now and get a free
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| take precedence over the IRS distribution
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| | bonus report on the best order to spend
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| rules for inherited IRAs or retirement
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| | your retirement assets.
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