Stretch IRA

By naming a beneficiary on your IRA account (typically a younger spouse but could also be a younger, non-spouse beneficiary), you might be able to "stretch" out your IRS-mandated yearly minimum distributions over a longer period of time. This gives you and your beneficiaries more time to take advantage of the tax-deferral status of IRA assets. This "stretch" strategy is appropriate only for those individuals who simply need and plan to receive the required minimum withdrawals, taken at the latest time allowed by law without penalty, age 70 ½. Use this calculator to provide a hypothetical projection of the required minimum distributions. Remember that the projected values should be reduced for any applicable federal and state and local income taxes that will be due.
Personal Information
Client Name  
Advisor Name  
Your Information
Month Day Year
What is your date of birth?
Let the system calculate your actuarial life?  
If "No", what is your hypothetical age at death? help
What was the year end balance of your account last year? ($)  
What is the anticipated rate of return? help
First Beneficiary
Month Day Year
What is the beneficiary's date of birth?
Is your spouse the beneficiary?  
If "Yes", let the system calculate your spouse's actuarial life?  
If "No", what is the spouse's hypothetical age at death? help
Second Beneficiary (Required if spouse is the First Beneficiary)
Month Day Year
What is the beneficiary's date of birth?
When investing assets that will be used to stretch IRA payments, the investor must be cognizant of any front-end or back-end sales charges that, when applied, can reduce the assets available. During an extended period of declining investment returns, the investor may experience income fluctuations, which may cause additional withdrawals to be made that will exhaust the account at a more rapid rate. There is no guarantee that a Stretch IRA strategy will be advantageous to your specific situation, and many of its benefits are based on current tax laws, which are subject to change. If these laws change in the future, an investor’s ability to maintain estimated distributions may be affected. Lengthy distribution periods, much like those involved in a Stretch IRA, expose an investor to significant market risk. Consult your financial or tax advisor for more information on Stretch IRAs.

Redeeming amounts in excess of the required minimum distribution will exhaust the account at a faster pace, reducing or eliminating the effectiveness of the Stretch strategy. Distributing amounts more than the required minimum could subject those distributions to higher federal and possibly state and local income taxes.

There can be no guarantee that the second- and third-generation beneficiaries will continue the Stretch IRA strategy and may elect to liquidate the account at any time.

Information and interactive calculators are made available to you as self-help tools for your independent use and are not intended to provide investment advice. We can not and do not guarantee their applicability or accuracy in regards to your individual circumstances. All examples are hypothetical and are for illustrative purposes. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues. Projected return rates are hypothetical and have been selected by you and/or your financial adviser. They are not representative or suggestive of any Lord Abbett returns. Legislative and/or regulatory actions can affect your actual outcome either positively or negatively.

Minimum distributions must be taken from traditional IRAs by April 1 following the year that a person turns 701/2. A minimum distribution must be taken from the IRA in each subsequent year. Failure to take the required minimum distribution will result in a 50 percent penalty on the amount that was not distributed. Mandatory distributions that represent deductible contributions and all earnings are taxed as ordinary income. Mandatory distributions based on nondeductible contributions are tax-free.

The use of the calculators are provided for educational purposes only and is not meant as legal tax, estate planning or investment advice. Lord Abbett does not provide legal, tax or investment advice. The tax and estate planning information contained herein is general in nature, is provided for informational purposes only, is not individualized and is not intended to serve as the primary or sole basis for your investment or tax-planning decisions. Lord Abbett cannot guarantee that such information is accurate, complete, or timely. Laws of a particular state or laws which may be applicable to a particular situation may have an impact on the applicability, accuracy, or completeness of such information. Federal and state laws and regulations are complex and are subject to change. Changes in such laws and regulations may have a material impact on pre- and/or after-tax investment results. The results of these calculations are estimates based solely on user input and the assumptions of the calculator program. All examples are hypothetical and intended for illustrative purposes only. Lord Abbett makes no warranties with regard to such information or results obtained by its use. Lord Abbett disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information. Investment results do not represent the future performance of any Lord Abbett funds. You should consult with your legal or tax advisor before making any investment decision.

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