Extended IRA

Extended IRA

An IRA that allows a second-generation beneficiary to continue to distribute the assets over the life expectancy used by the first-generation beneficiary, thereby extending the IRA.

Notes:

An individual who inherits IRA assets from the original IRA owner is referred to as the first-generation beneficiary. This individual is able to distribute the assets over his/her life expectancy or the remaining life expectancy of the IRA owner. If the first-generation beneficiary subsequently dies, his/her designated beneficiary is the second-generation beneficiary. This type of IRA is starting to be used by those who no longer need - nor want - to spend all of their IRA assets at the same time. Extended IRAs can have extensive tax benefits as second-generation beneficiaries are allowed to continue distributions over the life expectancy used by the first-generation beneficiary, thereby spreading the tax burden from distributions over a long period.

See also: Beneficiary, IRA, Roth IRA