By Robin Crouch
The term “stretch” does not represent a type of IRA, it refers to a financial strategy that allows people to stretch out the benefits from an IRA as well as receive income tax advantages. By using this strategy, an IRA can be passed down from generation to generation while beneficiaries enjoy the income as well as tax deferred growth for as long as possible.
Not all IRA custodial agreements allow the stretch strategy, you should check with your IRA custodian or financial institution to determine if beneficiaries will be allowed to take distributions over a life-expectancy period. Most IRA providers would rather make such allowances than have their customer transfer his or her IRA to another financial institution.
Please note, the average inheritance, when received by a beneficiary, is completely consumed within one year. The reasons are numerous but here are a few: Beneficiary wants to spend it; Creditors, Predators, and Divorce; Not understanding the rules and choices. . . when the money is gone, it's gone. With an IRA, not only would the money be gone, but there will be a huge tax bill to pay.
The good new is that the choice can be yours to make. If you wish to remove some of the roadblocks and ensure that your beneficiaries take the stretch and provide them with asset protection to avoid losing what you have worked a lifetime to earn, please ask about our Heritage Trust.