“Stretch” IRA
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From my understanding (after reading Ed Slott’s book in Chapter 6), the way to stretch my IRA, is simple: To fill out a “designated beneficiary” form and send it into the company holding the IRA account (the custodial company).
Is it that simple?
It seems that there should be more to it than that? I do not want my beneficiaries to be kicked out or dropped from the tax deferred status that Mr. Slott writes about.
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Permalink Submitted by Al Fry on Sun, 2007-11-25 16:33
I would suggest one more step: Talk to the claims people with the custodian to be sure they allow the stretch and ask how they communicate that to the benes. Sometime the stretch is missed because of poor communication (or bad advice). Also be sure your benes are aware of how it works and have a copy of information about the IRAs/ QRPs.
Permalink Submitted by Logan Berry on Sun, 2007-11-25 19:52
[quote=”[email protected]“]I would suggest one more step: Talk to the claims people with the custodian to be sure they allow the stretch and ask how they communicate that to the benes. Sometime the stretch is missed because of poor communication (or bad advice). Also be sure your benes are aware of how it works and have a copy of information about the IRAs/ QRPs.[/quote]
QRP = Qualified retirement plan?
Permalink Submitted by Logan Berry on Sun, 2007-11-25 19:59
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[quote=”[email protected]“]I would suggest one more step: Talk to the claims people with the custodian to be sure they allow the stretch and ask how they communicate that to the benes. Sometime the stretch is missed because of poor communication (or bad advice). Also be sure your benes are aware of how it works and have a copy of information about the IRAs/ QRPs.[/quote]
I have tried to have a discourse with some of the brokerage companies who advertise for rolling-over an IRA to be with them. I have asked specifically in writing, about assuring the “stretch” designation. I either get no reply to the letter, or, the response does not address that specific issue in writing. (Very frustrating. Maybe I have to address this question to the claims department? Any other suggestions?)
I have also asked for the procedure for keeping track of the “designated beneficiary” form, and also if they will be able to provide me with an “acknowledged copy” of the designated beneficiary form. Reference page 178 of Ed Slott’s book.
The replies I have gotten are a flat “NO,” we will not give you an acknowledged copy, and, “your questions are weird, please call us.” One company TDAmeritrade, said that information is proprietary and that they do not give it out. (Which i thought was really a crap response – seeming to be unwilling to tell me where my designated beneficiary form would be located, etc, if I was to open an account with them).
Any help on how to communicate with these larger brokerage companies in writing? I get no useful information in their correspondence. On the phone you can talk to three different representatives, on three different days, and they will tell you three different things.
Would rather have it in writing, but maybe that is asking too much?
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Permalink Submitted by Al Fry on Sun, 2007-11-25 20:13
I have no experience with on-line brokerage firms. The firm should be able to give you a brochure about IRA streches. If not, maybe they are not that experienced in doing them. As a related example, I consult with a firm that has been doing NQ annuity stretches for over seven years. A favorable PLR on NQ stretches was issued ib 2002, yet some companies still do not offer them.
Permalink Submitted by Bruce Steiner on Mon, 2007-11-26 00:30
IRAs have been around for over 30 years, so the ability of a beneficiary to stretch the IRA over his/her life expectancy is widely known. You shouldn’t have a problem with the financial institution.
Some beneficiaries take the money out before realizing they could have stretched it out (and some beneficiaries want the money immediately and don’t care about the tax benefits of stretching it out). If either of these might be the case, you might want to consider leaving the IRA (and your other assets) to them in trust rather than outright.
Permalink Submitted by Alan Spross on Mon, 2007-11-26 01:20
The problem of mishandled beneficiary designations is a legitimate concern. However, due to the various platforms that IRA custodians use to handle beneficiary designations, there is no simple template to follow to be sure an owner’s intent is reflected on the custodian’s records. Such things as a change of clearing firms and account transfers and conversions have resulted in disappearing designations.
Therefore, it is wise to simply ask the custodian to confirm their record in whatever fashion they normally use. Many firms will show the current designation on line and/or provide a written statement showing the current beneficiary. Some are even periodically sending a letter to IRA owners showing the current designation and requesting that it be changed if it is not correct or not current.
The account owner should print out whatever documentation they can secure for their own IRA file, and make a point to periodically not only review their own file, but request updated confirmation from the custodian.
Permalink Submitted by Bruce Steiner on Mon, 2007-11-26 01:26
Alan is correct. I only responded to the issue of whether the financial institution and the beneficiary could deal with the stretchout. Given the mergers and acquisitions of financial institutions, and the changes in their computer systems, it sometimes happens that a financial institution can’t locate the beneficiary designation form. Given today’s technology, and the lessons of September 11th, many financial institutions scan the beneficiary designations and store them electronically at remote locations. But it’s worth checking from time to time to make sure that the financial institution still has the beneficiary designation.
Permalink Submitted by Logan Berry on Thu, 2007-11-29 18:51
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[quote=”[email protected]“]IRAs have been around for over 30 years, so the ability of a beneficiary to stretch the IRA over his/her life expectancy is widely known. You shouldn’t have a problem with the financial institution. [/quote]
Why would a larger institution like Banc of America or TDAmeritrade, fail to respond or tell me essentially to bug off, when I asked them about assuring the stretch designation, or if I could get an acknowledged copy of the designated beneficiary form once I opened the account? Do you think I may have been talking with an unqualified person? It was completely unexpected when I asked after this information, and they either did not respond or said “no.”
Who should I direct correspondence to, to confirm the stretch designation, or ask for more information or a brochure? Above it was recommended that I ask someone in the Claims Department. Is there someone else in the company that might also be able to confirm in writing the practicality of assigning the stretch designation to the account?
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Permalink Submitted by Logan Berry on Thu, 2007-11-29 19:04
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[quote=”[email protected]“]… responded to the issue of whether the financial institution and the beneficiary could deal with the stretchout. [/quote]
Thank you.
[quote] …Given the mergers and acquisitions of financial institutions, and the changes in their computer systems, it sometimes happens that a financial institution can’t locate the beneficiary designation form. Given today’s technology, and the lessons of September 11th, many financial institutions scan the beneficiary designations and store them electronically at remote locations. … it’s worth checking from time to time to make sure that the financial institution still has the beneficiary designation.[/quote]
So to ask them where it is stored, and they tell you “online.” I guess they might not want to provide you with an acknowledged copy, even if they did scan it in and store it at a remote location? I asked TDAmeritrade to explain their procedure for handling the designated beneficiary form and where it would be located for storage, and they said it was proprietary and that just rang odd with me. I asked if they could provide me with “an acknowledged copy,” once I opened the account, and they said “no.”
Again, this just seemed completely out of character. What do you think would cause them to behave this way? I have since wondered if that was possibly a new-graduate-representative or an experienced officer who actually does not want customers to know that information (but for what reason)? I also thought I was interacting with the wrong person.
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Permalink Submitted by Logan Berry on Thu, 2007-11-29 19:17
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[quote=”[email protected]“] …A favorable PLR on NQ stretches was issued ib 2002, yet some companies still do not offer them.[/quote]
Sorry about my ignorance. Can you please provide more information in what is “PLR on NQ stretches.” Also, what is meant by “ib 2002?” Is that “issued in” 2002? Where could I read more about the favorable PLR or ruling or [i]issue[/i] that occurred in 2002?
Thank you for your positive help.
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Permalink Submitted by Logan Berry on Thu, 2007-11-29 19:28
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[quote=”[email protected]“]The problem of mishandled beneficiary designations is a legitimate concern. However, due to the various platforms that IRA custodians use to handle beneficiary designations, there is no simple template to follow to be sure an owner’s intent is reflected on the custodian’s records. Such things as a change of clearing firms and account transfers and conversions have resulted in disappearing designations.
Therefore, it is wise to simply ask the custodian to confirm their record in whatever fashion they normally use. … make a point to periodically not only review their own file, but request updated confirmation from the custodian.[/quote]
I guess when it is online, or on statements, the reasoning is that the information (designated beneficiary information) is right there on the front. That would also by reason, correspond to what they have on file. It would only change if you requested it to be changed. But how do you make sure the account has a stretch designation, as that information would not be put clearly on the front page of your statement, or when you logged into your account online. It would need to be confirmed in writing, from the institution.
How would you recommend the request be worded, and to what department, so that one does not get routed to the wrong department or correspond with people who do not understand how to process the request for information / written confirmation.
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Permalink Submitted by Al Fry on Fri, 2007-11-30 17:04
I seems like the easy answer to all of this is to deal with a FA that you can set down face-to-face with. Sometimes it is hard to develop a relationship through a computer. Although e-Harmony seems to have solved that problem.
Permalink Submitted by Alan Spross on Fri, 2007-11-30 20:31
🙂
Suggest you read the IRA agreement itself. It should include the RMD provisions of Sec 401A(9)b as required by the Revenue Procedure 2002-10, following release of the 2002 RMD requirements.
As long as you can understand what the agreement says, that’s better than getting incorrect info from a custodian’s employee. Continuing education must not be a priority for many of these firms.
Permalink Submitted by Logan Berry on Mon, 2007-12-03 23:56
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[quote=”[email protected]“]I seems like the easy answer to all of this is to deal with a FA that you can set down face-to-face with. Sometimes it is hard to develop a relationship through a computer. Although e-Harmony seems to have solved that problem.[/quote]
Ahhhh, mockery. It seems the forum may have outlived its usefulness. Now you might understand why I am hesitant to sit with a FA.
Another reason is that I do not want to sift through the interpersonal nuances of a relationship with someone to get the information. I just want the information. Unencumbered.
I do not like sitting in someones office and they may be having a bad day and not tell you that their day or week has been difficult. Instead they tell you something to the effect of “you dont understand, you need to do this,” or “if you dont like my advise, you can always consult someone else.” … If its a lady she might start flirting with you to make up for other inadequacies she is experiencing in her life. … I could list other mild or more aggressive forms of miscommunication or intimidation, but the best information gets messed up after the first instance. Thats the reason I was reading Ed Slott’s book.
Who needs e-Harmony when your FA is having a bad week?
I do not believe all financial advisers are going to mix signals and I do not tend to run from good advise. But I was hoping for straight information without being padded around or referred to someone else.
Thanks for the positive efforts above.
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Permalink Submitted by Larry Browne on Sat, 2008-03-29 19:51
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[Another reason is that I do not want to sift through the interpersonal nuances of a relationship with someone to get the information. I just want the information. Unencumbered.
I do not like sitting in someones office and they may be having a bad day and not tell you that their day or week has been difficult.
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So, you don’t want to sit through an interpersonal relationship, but you want them to tell you that their day or week has been difficult?
That seems conflictory
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… If its a lady she might start flirting with you to make up for other inadequacies she is experiencing in her life. …
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I wonder how the women who try to help people on this board by responding to questions feel about this comment? How do you think they feel?
Permalink Submitted by J Futch on Wed, 2008-04-02 01:21
Maybe it’s because while they might offer the product, your beneficiaries don’t have to choose it, so they don’t want to “guarantee” anything to you in writing.