Ira Beneficiary Planning Strategies

Ira Beneficiary Planning Strategies



IRA Beneficiary Planning Strategies
Here’s an​ estate-planning technique that allows you to​ lower the​ tax sting to​ your heirs, and​ that reduces your retirement income in​ case you don’t think you will need all of​ your Individual Retirement Account funds in​ retirement .​
It’s called a​ stretch IRA, or​ Multi-generational IRA, a​ complex investment tools that allow you to​ extend the​ tax-deferred status of​ your IRA long after your death.
By naming your children and​ grandchildren as​ the​ beneficiaries of​ your retirement assets, you enable them to​ stretch out the​ annual distributions of​ that IRA over the​ course of​ their lifetimes.
Structuring the​ stretch
There are four primary approaches to​ structuring a​ stretch IRA; the​ traditional, spousal-rollover, participant-direct and​ the​ mixed, or​ combination, approach.

In the​ traditional set-up, your spouse is​ the​ primary beneficiary and​ your children or​ grandchildren are the​ contingent beneficiaries, however distributions and​ income tax deferral are extended only through the​ life expectancy of​ the​ oldest beneficiary .​
By using the​ Spousal Rollover Approach instead, your spouse remains the​ primary heir and​ children or​ grandchildren become the​ beneficiaries with their own IRAs .​
This strategy allows the​ distributions and​ income tax deferrals to​ extend through-out the​ lifetime of​ the​ beneficiaries you name .​
That, in​ turn, provides significantly more tax deferral and​ a​ much longer opportunity for​ that IRA investment to​ grow.
if​ neither you nor your spouse need to​ dip into the​ IRA during your lifetime, you could also consider structuring your multi-generational IRA using the​ Participant Direct approach, which can provide the​ greatest tax benefit of​ all.
Using this strategy, you’ll be asked to​ break up your retirement assets into several different IRAs like the​ spousal rollover-except that your children and​ grandchildren, not your spouse, are listed as​ the​ primary beneficiaries, so you can lower the​ amount of​ the​ minimum distributions you are forced to​ take out once you hit age 70-1/2, and​ leave more money behind for​ your heirs.
Lastly, there’s the​ Mixed approach .​
a​ combination of​ strategies from the​ stretch IRA, it​ is​ structured as​ a​ spousal rollover with the​ remainder under the​ participant direct category .​
You may want to​ give this strategy a​ closer look if​ the​ surviving spouse does not need the​ IRA assets, but reigns while he or​ she is​ still alive .​
Consult a​ qualified financial planner experienced in​ Stretch IRAs for​ more specifics on these plans and​ which approach is​ right for​ you and​ your family.
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