The Elimination of the Stretch IRA Could Mean 30–40% Less Wealth to Your Loved Ones

(don’t forget to checkout the video of this blog too)

The Stretch IRA used to be an integral part of many people’s Estate Plan.

It used to extend the tax benefits of retirement assets to your loved ones.

Inherited retirement money could continue to grow tax-deferred AND your loved ones could reset the Required Minimum Distributions (RMDs) to their life expectancy.

This might not seem like a big deal….

But it was‼️

By not being forced to take distributions beneficiaries had more control of their tax bill.

By stretching out the duration of income withdrawals, money could continue growing tax-deferred…

Until the loved one need it….

Or until they were in a low enough tax bracket that it made sense.

They could even strategically withdraw money tax-free by utilizing their annual tax deductions.

But this wonderful strategy is no longer viable.

The government decided that they wanted their tax money NOW.

Now, when a beneficiary inherits a retirement account they are FORCED to liquidate it and pay ALL the taxes on the income within 10 years (unless you’re a spouse)‼️

This might not seem like a huge deal but a lot of people inherit money in their peak earning years.

Meaning these distributions will accumulate in addition to their earned income…

Meaning they will pay taxes on the highest bracket they are currently in (or be forced into higher tax brackets).

This can easily wipe out 30–40% of the money you intended on leaving your loved ones.

That’s why it’s much better to prioritize the spending of your taxable retirement accounts (as your primary source of retirement income).

This money is the absolute WORST money to leave your loved ones with the elimination of the Stretch IRA.

Now, there is a still a way to do something similar to a stretch IRA, but it can no longer be done with your actual retirement accounts.

It now has to be done using one of the most underutilized vehicles in the tax code for wealth transfer…

It’s actually a properly structured life insurance vehicle built specifically for maximum tax-free wealth transfer (and little to no cash value accumulation).

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