One way to create a lasting legacy for your heirs is to “stretch” the money contained in your IRA to maximize the portion that you pass to your beneficiaries. By taking the smallest allowable distribution from your IRA, a greater portion of your account can continue to grow tax-deferred and your IRA will achieve maximum tax-deferred growth potential. When you pass away, your beneficiaries can receive IRA income for the remainder of their life expectancies.
Minimize the current income taxes paid by your beneficiaries by spreading out IRA payments and income taxes.
By extending payments from the IRA over your beneficiaries’ life expectancies, they are also extending the tax liability associated with their distributions.
Create a stream of income for your beneficiaries that lasts a lifetime.
Using a “stretch” strategy, your beneficiaries will only access a portion of the IRA each year and the remainder will continue to grow on a tax deferred basis. The end result – you may positively impact the lives of your loved ones for many years, as your legacy may provide the additional resources needed to attend college, purchase a home, or elevate their standard of living.
Of course, many of the benefits of the “stretch” strategy are based on current tax laws, which could change in the future. In addition, before incorporating this strategy into your financial plan you should be confident that you will not need a substantial portion of your IRA assets during your retirement.
The experts at Len Tillem Insurance and Retirement Planning will help you determine whether a “stretch” strategy is appropriate, given your unique needs and goals. Contact us today.
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