Stretch IRA
A strategy that formerly allowed non-spouse beneficiaries to take inherited IRA distributions over their lifetime; mostly eliminated by the SECURE Act of 2019, which now requires most beneficiaries to empty inherited accounts within 10 years.
Understanding Stretch IRA
Before the SECURE Act, non-spouse beneficiaries could take inherited IRA distributions over their lifetime (stretching the tax-deferred growth). Now, most non-spouse beneficiaries must empty the account within 10 years. This compressed distribution timeline can push beneficiaries into higher tax brackets. Roth IRAs inherited from spouses and IUL death benefits provide superior tax treatment for beneficiaries.
Why This Matters for Retirement: Understanding Stretch IRA is essential for making informed decisions about tax-free retirement income strategies. Whether you are evaluating an IUL policy, planning Roth conversions, or comparing retirement vehicles, this concept directly affects your outcomes.