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hypothetical account value


emily: gRAndcHIld

Upon Tim’s death, his daughter Emily can continue distributions based on the remainder of Tim’s life expectancy. Emily can receive distributions until such a time that the account value has been completely distributed.

“We’ve decided to pass our assets along to our child and grandchild.”

Since the Turners don’t need Larry’s 401(k) money for retirement, they’ve decided to work with their financial professional to pass a majority of it on to their loved ones.

One of the ways the Turners could stretch out the distribution payments over their lifetimes and potentially their beneficiaries’ lifetimes is to use a stretch IRA. A stretch IRA allows the beneficiaries – and potentially their beneficiaries – to receive the value of the IRA in a series of payments throughout their lives. IRA distributions to the beneficiaries will be taxed at ordinary income tax rates.

a stretch ira allows the beneficiaries to:

  • Name a new beneficiary who can continue to receive distributions if there is money left in the IRA

  • Minimize current taxes by taking only the annual required minimum distributions

  • Continue the IRA’s tax-deferred status

  • Control the amount of income they receive in case they need more than the minimum amount


  • Hypothetical account value growth was compounded at 6% net growth annually. These results are for illustrative purposes only and do not reflect the return associated with any actual investment.

  • Federal income tax assumes a 28% tax rate. State income taxes may also apply. Taxes paid will be at ordinary income tax rates and will depend on your marginal tax rate then current for the year distributions are received.

1 This illustration depicts year-end values, assumes there is no change in the current tax law, does not take into account the impact of inflation or additional expenses and does not reflect the fees and charges of any product. The hypothetical does not reflect the impact of any state income taxes

2 This illustration assumes that the total estate is large enough to be subject to estate taxes.


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