Stretch IRA
Is the following an accurate statement:
“The only method available to “stretch” retirement assets is via an IRA?” Is an individual eligible to stretch 401(k)s, 457, 403b, etc.? Does it depend on the plan document or is it just not permitted as per IRS?
Thank you.
Permalink Submitted by Alan Spross on Sat, 2012-01-14 01:21
No.
Stretching retirement plan distributions over a joint life expectancy applies to all qualified plans under Secs 401, 403 and 457, as well as to IRAs. Even if the plan owner is single, the RMD table assumes a joint life expectancy with a spouse that is 10 years younger. After the death of the owner, a non spouse beneficiary can only use their own single life expectancy.
However, while rare, an employer plan may contain restrictions that impose the 5 year rule if the plan owner passes prior to the required beginning date, and if that occurs, the beneficiary should transfer the death benefit to an inherited IRA before the end of the year following the year of death. These plans can be more restrictive than the IRS allows, but not less restrictive. Most of them follow the IRS rules.
Non qualified annuity owners can annuitize their contracts over their life expectancy or joint life expectancy, and are required to start distributions at a certain age governed by state law. Options vary as to annuity beneficiaries.