"Stretch" IRA Information for Spouses

Utilizing a stretch IRA can allow you to spread out the IRA funds over multiple generations. If your spouse is younger than you, they may be able to benefit from stretching out the IRA as well. Here are a few things to consider about stretch IRA information for spouses.

What Is a Stretch IRA?

A stretch IRA is not a specific type of account that you can open. It is merely a method to transfer your wealth to a spouse or younger family member. Therefore, you will be able to utilize this concept with any type of IRA that you have.

Required Minimum Distribution

With the current rules of IRAs, you are supposed to start taking a required minimum distribution at the age of 70 1/2. At that point, the IRS has a life expectancy table that they use to determine how much money you have to withdraw each year. If you die and your beneficiary inherits the funds from your IRA, they are supposed to start taking a required minimum distribution regardless of how old they are. However, if your spouse is the beneficiary to your IRA, they can get around this. This will allow them to stretch out the amount of time that is necessary to start taking withdrawals. Spouses are allowed to roll over the IRA into their own IRA. If your spouse is significantly younger than you, they will be able to keep the money in their IRA for many years. They will not have to start taking required minimum distributions until they reach the age of 70 1/2. This provides them with additional time to invest and earn returns on the investments.

Stretching Further

In some cases, a surviving spouse may not necessarily need the money from the IRA. In this case, they are able to pass the funds from the deceased spouse's IRA to another beneficiary. For example, let's say that a man has a substantial IRA built up and passes away. The man's wife has significant funds build up in other accounts and does not wish to take the money from the husband IRA. Instead, she can elect to pass the count on to their grandson. The grandson is only 10 years old at this time. With such a substantial amount in the IRA, the grandson will have quite a head start on saving for his retirement. He will have many more years to invest and allow the funds to continue to compound. In this manner, you could potentially ensure that your grandchildren have millions of dollars to work with during their lifetime.

The younger the beneficiary that you choose, the lower the required minimum distribution will be that they have to take. The IRS uses life expectancy tables regardless of the age of the beneficiary. Therefore, if you choose to pass on your IRA to a younger generation, it will allow most of the money to continue to grow in the account.


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