As an estate planning tool, the stretch IRA lets you help your affluent clients achieve a goal they might have thought was unavailable — stretching tax-deferred assets over multiple generations. Advantages of using this strategy, besides those described in previous screens, include:
- The owner maintains control of the IRA throughout his or her lifetime, and is always available should the retiree need it. If the owner's situation changes while living, he or she always reserves the right to liquidate as much of the IRA as needed.
- More money may be passed along from the IRA owner to the next generation and the generation after that. If the beneficiary's situation changes after the death of the owner, the beneficiary always reserves the right to take a full or partial liquidation instead of the RMDs.
- The money is paid out as death distributions. Therefore, there is no 10 percent federal tax penalty even if the beneficiary is under age 59 1/2.
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