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Take steps to stretch your IRA
3. Consolidate retirement assets and establish separate accounts for each of your beneficiaries
IRAs offer choices and flexibility that you will not find in employer-sponsored plans like 401(k) s. Consider rolling your assets from any former employer plans into your IRA. Then bring all of your IRAs under one roof with the help of your financial advisor, which will make it easier to put an overall stretch strategy into place.
Multiple beneficiaries of an inherited IRA have until December 31 of the year after the account owner dies to split the inherited IRA into individual accounts and use their own life expectancies to calculate the remaining distributions. If the IRA is not split into separate accounts at that time, the RMD of the account will be calculated using the oldest beneficiary's life expectancy. In the example below, the IRA owner named three beneficiaries. By splitting a $500,000 IRA into three separate IRAs, the beneficiaries stretched the IRA to over $3 million in distributions.
| Inherited IRA Assets |
Beneficiary |
Life expectancy used for calculations |
Distributions |
| $250,000 |
Spouse age 701 |
17 |
$683,986 |
| $125,000 |
Child, age 40 |
43.6 |
$1,067,574 |
| $125,000 |
Child, age 35 |
48.5 |
$1,416,103 |
| |
|
Total |
$3,167,663 |
Read more about how to stretch your IRA:
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