STRETCH IRAs
01.Core Concepts
• The concept of a stretch IRA is to minimize distributions from the IRA so that tax deferred assets can grow as much as possible unimpaired from income tax. • Accomplished pre-SECURE Act by selecting a young beneficiary who could distribute over their life expectancy • Stretching IRA benefits after SECURE Act is now limited due to eligible vs ineligible beneficiaries and the 10-year distribution rule. QUALIFIED PLAN AND IRA BANKRUPTCY PROTECTION • Bankruptcy protection is available for retirement plans 1. All ERISA type retirement plans and rollovers from them to IRAs are exempt for an unlimited amount (so long as regular IRA contributions are not commingled with the rollover). 2. SEP and SIMPLE IRAs are exempt up to an unlimited amount. 3. Traditional and Roth IRAs are exempt up to $1,000,000, which is adjusted for inflation every three years ($1,512,350 in 2022-2024; the next adjustment will be in 2025). •