Using Tax-Free Income to Prepare For the Death of the Stretch IRAUsing Tax-Free Income to Prepare For the Death of the Stretch IRA

Last month, I began examining the likelihood and consequences of the impending death of the stretch individual retirement account.  “Stretching” an IRA refers to the practice of partially sustaining the tax-deferred status of an IRA when, after the death of the owner, the account is left to non-spouse beneficiaries (typically, children). Unfortunately, the stretch IRA is under siege, and if eliminated, a non-spouse beneficiary of an IRA will be required to pay income taxes on the entire inherited IRA within five years of the IRA owner’s death (technically on Dec. 31 of the year five years after death). In my previous article, I made the case for naming a charitable remainder unitrust (CRUT), rather than the children, as the contingent be...