Extended IRA

Extended IRA

An IRA from which a second generation beneficiary receives funds after both the account holder and the first generation beneficiary have died. The second generation beneficiary is the heir of the first generation beneficiary, who was the heir of the account holder. An IRA may be extended when the second generation beneficiary does not need or want to receive all the funds at once. This may be beneficial, as the second generation beneficiary retains all the tax benefits associated with the IRA.
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Also, by using the trust for the extended IRA, the grantor can better control when the distributions are actually received and who receives them.
Nationwide(R) Family TRU Trust(SM) (Total Return Unitrust) now includes revocable trusts, and the ability to use trusts for distributions from extended IRAs.
Extended IRAs are often used to fund the credit shelter trust.
According to Butler, for those clients who want to continue to maximize tax deferral, possibly beyond death, the extended IRA is a strategy worth consideration.
The Market Opportunity Guide for IRA Distribution Planning defines the potential client and the benefits an extended IRA can provide.
The final phase will focus on Family Protection issues, including distribution planning, extended IRAs, spousal-protection IRAs and death- benefit features.
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