Retirement Account Stretch-out Planning

Do You Want To Pay Taxes Now or Later?

Is it better to pay taxes now or later? Some would say that why not get it over with if you will ultimately have to do it anyway. Well, look at it this way. If someone gave you a dollar to pay to Uncle Sam for taxes, but said you can pay it whenever you want as long as you pay it, what would you do? In most cases it would be better to pay it later. Why? You get to keep earning interest on the dollar as long as you hang on to it. If you keep it for years, then year after year to earn more interest and it keeps compounding. Someday, if you pay the dollar to Uncle Sam, you will still have a pile of interest that the dollar earned. Make sense to you?


Uncle Sam Gives His Blessing to Stretch It Out

In 2003 new laws were passed allowing a non-spouse beneficiary (typically kids or grandkids) to “stretch out” paying the income taxes on an inherited IRA or Retirement Account over their own life expectancy. For example, a 40 year old may be able to stretch out paying the taxes over 40 years. This is huge! Why? If you start doing the math, depending on the age of the beneficiary, an inherited account of a couple hundred thousand dollars may be worth millions over their life time depending on the age of the beneficiary (the younger the better).


Take Control of One of the Biggest Assets You Own With a Customized Legacy Plan for Your Loved Ones

The Stretch-Out IRA or Multi-Generational IRA can be a major advantage to the average family. The key is knowing how to take advantage of it. So many people have heard about it but have done nothing to make sure it happens. This can be a monumental mistake. It’s kind of like if you would have checked a box on your tax return you would have gotten back a bunch of money but you forgot to check the box. Wouldn’t that make you feel bad if that happened? Imagine what you would feel like if you knew that a failure to plan cost your family hundreds of thousands of dollars. This can happen very easily.


Set Up a “Stretch-Out Legacy Plan”

It is important that you take steps to protect what you have worked a lifetime to accumulate for your family. A customized “Stretch-Out Legacy Plan” can to make sure that your family reaps the long-term benefits of what the law changes have allowed for. This type of plan includes ways to make sure your heirs are aware of the stretch-out, can take advantage of it, protects against blowing up the stretch-out (once it is blown up it cannot be fixed), protects against predators and creditors (bad things that might happen like divorce, lawsuits, creditors, etc.) and provides a long-term legacy for your family.


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