What is the "stretch IRA" concept?

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2 weeks ago
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It sounds fancy and fun, but the "Stretch" IRA is a fairly simple strategy (not an actual account type). It is a way to defer paying taxes on an inherited IRA by taking distributions over the non-spouse beneficiary’s lifetime. The Investopedia article does a great job of explaining this.

Here is a Sona Financial 90 sec video to help explain it:


It is NOT yet passed, but a bill introduced would do away with the Stretch IRA and require that you take it within 5 years. It is called the Retirement Enhancement & Savings Act Of 2016.

Why Change The Rules?

  • Help Fill Government Coffers
    • Much like the government doing away with File & Suspend for Social Security
    • The overhaul to the government's retirement income program last time was tacked onto the budget bill
      • Last Minute!
      • Little Debate!
    • Will have to liquidate within 5 years
      • Exclude $450,000 From the 5-Year Rule

Good Luck!

Mark Struthers CFA, CFP®

November 2009
3 weeks ago