what is a stretch IRA and how does the inherited IRA work? Did you know a beneficiary IRA is the same as a multi generational IRA? Stretch IRAs and Stretch IRA rules….(read more)

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A stretch IRA is a tax-advantaged retirement savings account that allows an individual to pass on their assets to their beneficiaries. This form of IRA is designed to extend the life of a retirement account by allowing the beneficiaries to “stretch” the distributions over their lifetime, enabling tax-deferred growth for years to come. When it comes to managing a stretch IRA, it is crucial to seek advice from an advisor who understands the nuances of these accounts.

There are a variety of advisors that can assist individuals with stretch IRA management. However, two critical types of advisors include financial advisors and estate planning attorneys. A financial advisor can assist with managing the investment portfolio and ensuring the distributions align with the beneficiary’s individual circumstances. An estate planning attorney can provide legal guidance to ensure that the beneficiary’s inheritance is protected and distributed appropriately.

Financial advisors can be further broken down into two categories: fee-only advisors and commission-based advisors. Fee-only advisors charge their clients a flat fee, usually based on assets under management, and do not receive any commission from the sale of financial products. Commission-based advisors receive a commission on investment product sales and services, which can potentially harm the advisor’s objectivity.

Estate planning attorneys can be an essential component of any stretch IRA management team. An attorney can ensure that the beneficiary’s inheritance is structured in the most tax-efficient manner and protected from creditors or legal disputes. They can also help with the creation of a trust as part of the overall estate plan to help ensure that the assets are transferred according to the individual’s wishes.

When choosing an advisor to manage a stretch IRA, it is essential to consider their experience and qualifications. Look for an advisor who is a Certified Financial Planner (CFP) or an attorney who specializes in estate planning. These professionals have specific training and knowledge that can assist in the complex management of a stretch IRA. Additionally, seek out advisors who have a strong track record of working with clients to manage retirement accounts and provide comprehensive financial planning services.

In conclusion, managing a stretch IRA requires expertise and attention to detail. It is critical to engage the right advisors to ensure that the account is managed optimally and that the beneficiary’s inheritance is protected. By seeking guidance from qualified financial advisors and estate planning attorneys, individuals can maximize the benefits of their stretch IRA and provide future generations with a valuable financial legacy.