Stretch IRA
Financial term in the Retirement category
Definition
A strategy that previously allowed non-spouse beneficiaries to stretch inherited IRA distributions over their lifetime, maximizing tax-deferred growth. The SECURE Act of 2019 largely eliminated this for most beneficiaries, replacing it with a 10-year distribution rule.
Related Terms
Inherited IRA
An IRA received by a beneficiary after the original account holder's death. The SECURE Act of 2019 generally requires non-spouse beneficiaries to withdraw all funds within 10 years, while surviving spouses have more flexible distribution options.
Beneficiary
A person or entity designated to receive assets from a trust, insurance policy, retirement account, or will after the owner's death.
Frequently Asked Questions
What is Stretch IRA?
A strategy that previously allowed non-spouse beneficiaries to stretch inherited IRA distributions over their lifetime, maximizing tax-deferred growth. The SECURE Act of 2019 largely eliminated this for most beneficiaries, replacing it with a 10-year distribution rule.
Why is Stretch IRA important in personal finance?
Stretch IRA is an important retirement concept that helps individuals make better financial decisions. Understanding Stretch IRA can improve your financial planning and help you achieve your money goals.
How does Stretch IRA relate to Inherited IRA?
Stretch IRA and Inherited IRA are related financial concepts. An IRA received by a beneficiary after the original account holder's death. The SECURE Act of 2019 generally requires non-spouse beneficiaries to withdraw all funds within 10 years, while surviving spouses have more flexible distribution options.
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