Things to do if the Stretch IRA Dies | Peak Financial Freedom Group
three things

3 Things to Do if the Stretch IRA Dies

The House of Representatives voted in favor of the Secure Act 417-3, and the bill is now on a fast track to vote in the Senate. The bill would do away with the tax-planning strategy for inherited IRA commonly referred to as the “stretch IRA.” “Stretching” an IRA allows beneficiaries to take required minimum distributions (RMDs) from an inherited IRA based on their own, longer life expectancies. The Secure Act proposes that beneficiaries must deplete inherited IRAs within 10 years of the original owner’s death. This could cause a bigger tax burden on beneficiaries and cause them to lose the advantage of continued tax-deferred growth. However, there will be exceptions to the proposed new rules, and alternatives to a stretch IRA.

Exceptions

The Secure Act would do away with the stretch IRA option for everyone except surviving spouses, an owner’s child who is still a minor, a beneficiary who is chronically ill or disabled, or a beneficiary no more than 10 years younger than the original owner. So, instead of leaving an IRA to a young grandchild, leaving it to a family member who fits on of the above categories could be a better choice.

Roth Conversion

If you’re estate planning for your loved ones, you know that it’s not just important to consider taxes at the present, but also taxes in the future that will affect your heirs. One way to decrease your beneficiary’s tax burden is to convert a traditional IRA into a Roth IRA. After you pay tax on the amount you transfer, the funds in a Roth IRA can continue to grow tax-free throughout your lifetime. Then, a non-spouse beneficiary can take RMDs from a Roth without being taxed.

Charitable Trusts

A charitable remainder trust allows you to leave money to an heir and a charity. Over a specified period of time, a beneficiary will receive a stream of income from your assets, and at the end of that period, the charity will get the rest. This involves setting up a trust to be beneficiary of the IRA and choosing a qualified charity.

The professionals at Peak Financial Freedom Group know how important estate planning is to many retirees. If you’re interested in learning how to pass on your wealth in the most tax-efficient way possible, click here to schedule your complimentary financial review.

Leave a Reply

Your email address will not be published.

Peak Financial Freedom Group
2520 Douglas Boulevard, Suite 110
Roseville, CA 95661

DISCLOSURE:

All presentation data is provided and intended to be used for general educational purposes only and is not intended as a solicitation for you to buy or sell any financial product.  By contacting Peak Financial Freedom Group, you may be offered additional information regarding the purchase of financial products. None of the material presented is intended to give you, nor are the presenters engaged in giving you, specific tax, investment, real estate, legal, estate, retirement, or financial advice, but rather to serve as an educational platform to deliver information; nor is it intended to show you how the strategies presented can specifically apply to your own tax, investment, estate, financial, or retirement position, but rather to offer an idea of how these principles generally may apply. Consult with a qualified investment, tax, legal, and/or retirement advisor before making any decisions.

Stocks, bonds, or mutual funds have risks and can lose principal, even with a stop loss, and there are no guarantees of gains, as past performance is not indicative of future positive investment results. Hypothetical examples are used to explain concepts and are not indicative of potential results you could receive. The sale or liquidation of any stock, bond, IRA, certificate of deposit, mutual fund, annuity, or other asset to fund a new portfolio and/or annuity may have tax consequences, early withdrawal penalties, or other costs and penalties as a result of the sale or liquidation. You can’t invest directly into a stock market index. A fixed index annuity with an income rider can protect your savings from losses and provide you guaranteed lifetime income, but you could incur surrender charges, gains aren’t guaranteed, you’ll pay a fee, and guarantees are backed by the financial strength claims paying ability of the issuing annuity company. If you place assets under management with our firm, we receive advisory fees for assets you place under management and commissions from insurance companies you buy products from. Seminars, radio shows, TV productions, book releases, magazine and book promotions are sponsored, promoted and paid for by Peak Financial Freedom Group, LLC.

Peak Financial Freedom Group LLC and Fiduciary Solutions LLC do not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by an unaffiliated third party, whether link to Peak Financial Freedom Group LLC’s web site or incorporated herein and take no responsibility therefore. All such information is provided solely for the convenience purposes only and all users thereof should be guided accordingly.

2019(1) and 2020(2) Five Star Professional Wealth Manager Award - Dan Ahmad and Jim Files have been nominated for and have won the 2019 and 2020 Five Star Wealth Manager awards. Wealth managers do not pay a fee to be considered or placed on the final list of Five Star Wealth Managers. Once awarded, wealth managers may purchase additional profile ad space or promotional products. Award does not evaluate quality of services provided to clients. The Five Star award is not indicative of the wealth manager’s future performance. The inclusion of a wealth manager on the Five Star Wealth Manager list should not be construed as an endorsement of the wealth manager by Five Star Professional or this publication. Working with a Five Star Wealth Manager or any wealth manager is no guarantee as to future investment success, nor is there any guarantee that the selected wealth managers will be awarded this accomplishment by Five Star Professional in the future. Award winners represent an exclusive group of wealth managers who have demonstrated excellence in their field by satisfying 10 objective selection criteria. For additional information on the Five Star award, including a complete list of the 10 objective selection criteria and their research/selection methodology, go to https://fivestarprofessional.com.

Investment advisory services are offered through Fiduciary Solutions, LLC, a Registered Investment Advisor (CRD #148118). Insurance products and services are offered through PFFG Insurance Agency LLC, a licensed insurance agency (CA License #0N14013). Peak Financial Freedom Group, LLC is a financial planning and umbrella marketing organization, which enables the provision of multiple financial services under one brand. Peak Financial Freedom Group LLC, PFFG Insurance Agency LLC, and Fiduciary Solutions LLC are affiliated entities with common ownership and control. Jim Files is licensed as an investment adviser representative with Fiduciary Solutions LLC (CRD # 1620449) and is a licensed insurance producer with PFFG insurance Agency LLC (CA Insurance License #0F06511). Dan Ahmad is licensed as an investment adviser representative with Fiduciary Solutions LLC (CRD # 1491561) and is a licensed insurance producer with PFFG insurance Agency LLC (CA Insurance License #0732913).

© 2020 Peak Financial Freedom Group