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.


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.

Comments (6)

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Your email address will not be published.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. None of the material in this presentation 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.

Stocks, bonds, or mutual funds have risks and can lose principal, even with a stop loss, and there is no guarantees of gains, as past performance is not indicative of future positive investment results. 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.

Illustrations/projections displayed within this presentation are hypothetical in nature and should not serve as the sole determining factor in making financial decisions. Consult with a qualified investment, tax, legal, and/or retirement advisor before making any decisions. By contacting Peak Financial Freedom Group, you may be offered additional information regarding the purchase of financial products. Seminars, radio shows, TV productions, book releases, magazine and book promotions are sponsored, promoted and paid for by Peak Financial Freedom Group, LLC. If you place assets under management with our firm, we are paid an advisory fee, and if you purchase an annuity from our firm, we are paid commissions from an insurance company.

Investment Advisor Representatives of and Advisory Services offered through Fiduciary Solutions, LLC, a Registered Investment Advisor. Peak Financial Freedom Group LLC is primarily a fixed insurance sales organization and provides no Advisory Services. PFFG Insurance Agency LLC, CA License #0N14103, is a licensed insurance agency and provides no Advisory Services. Peak Financial Freedom Group LLC, PFFG Insurance Agency LLC, and Fiduciary Solutions LLC are separate affiliated entities. Insurance products and services provided by PFFG Insurance Agency LLC and independent agents.

Jim Files CA Insurance License #0F06511 Dan Ahmad CA Insurance License #0732913

© 2020 Peak Financial Freedom Group