Stretch Your IRA

It can be distressing to think that a large portion of what you have accumulated in your IRA or 401(k) will go to the government, instead of your beneficiaries.  IRA's are not taxed when passed to a spouse, but when passed to other beneficiaries such as children or grandchildren, they are subject to income taxes.  This can quickly propel a beneficiary into upper tax brackets, and cause a large portion of your IRA to go to the government.  

​Congress passed a law in 2001 that allows beneficiaries to inherit an IRA  and retain its tax-deferred status - commonly called a Stretch IRA.  But the IRA must be set up properly in order to establish the Stretch.  Making a trust the beneficiary of an IRA greatly complicates the process, and can even eliminate the possibility of setting up a Stretch IRA.  
​When set up correctly, it is possible to pass on significantly more money to your beneficiary due to the IRA retaining its tax-deferred status and compound interest.With thoughtful planning, a Stretch IRA could be a key component in you leaving behind a legacy that will be meaningful and enduring.

*IRS Publication 590. Pages 88 and 89.
**Business Week, April 16, 2001. “Your Retirement Fund Just Got More Fruitful.”
*** Time Magazine, October 30, 2000.  “Stretch That IRA.”


Life Insurance

​PlanningLife insurance can be used as a planning tool to accomplish different estate planning objectives at different points in our lives. Some of the uses of life insurance include:

Family Protection:  If you are raising a family, life insurance can be a way to create a pool of money for your spouse and children at your death to replace the income lost to the family.  Having enough life insurance to pay off debt, as well as provide money for the education of your children can be of great value. 

Legacy Creation:  If you are retired and have income that you do not need to live on, life insurance can be a way to create a larger legacy for your loved ones. If, for instance, your required minimum distributions from your IRA are more than you need to live on when combined with other sources of income, those distributions could be used to pay the premiums on a life insurance policy to create an income tax free benefit for your heirs or a favorite charity. Be very careful that your income needs are being very comfortably met before considering this approach.

Texas Property TaxBack® Program:  Homeowners in Texas can leverage the amount they are paying in property taxes to fund a life insurance policy to create a larger legacy for their loved ones, or their church, or favorite charity.  Please see the tab on this website for more details.