There are several planning considerations advisers should address with their clients who are interested in the stretch IRA concept. These include:

• Who will be the IRA's beneficiary? The beneficiary will depend on the distribution strategy selected:
  • Spousal Rollover. Spouse is sole beneficiary, and at retiree's death the spouse rolls the IRA into a new account in his or her name and names a new beneficiary (the next generation). At spouse's death, the young heirs adjust benefits downwards with their longer life expectancy.
  • Direct Approach. Children, grandchildren or other young individuals are named as primary beneficiary, immediately stretching the IRA at the retiree's death.
  • Combination Approach. Combines the first two approaches by splitting the IRA and distributing one sum to the spouse (for rollover) and the other directly to the younger heirs.
• Should the IRA owner split the account now? If there is more than one primary beneficiary, the distribution to all is based on the oldest beneficiary's age (thus maximizing the distribution). Separating the IRA into separate accounts, one for each primary beneficiary, lets each younger beneficiary's account be distributed over his or her longer life expectancy.
• Should other qualified plan assets be rolled into an IRA for stretch purposes? Even if the client doesn't want to take the stretch approach, IRAs may offer choices and flexibility that employer-sponsored plans don't.