Legal Blog

The Weekly Scenario: Stretch IRA

Question: What is a ‘stretch’ IRA and can I stretch other types of retirement accounts?

Answer: The term ‘stretch IRA’ is an invented word that goes by other names (you may also hear other names for the same thing such as “Legacy IRA” or “Generational IRA” or the “Hundred Year IRA”).

A stretch IRA, rather, is a process, not a product. A stretch IRA means keeping your inherited account growing tax deferred for your beneficiaries for as long as legally allowed.

But it is not so easy to stretch ‘other’ type plans such as your company retirement plan. While the IRS generally allows the stretch for beneficiaries of these plans, most companies do not permit it. Employers don’t want the cost and administrative burden of paying out distributions many years after an employee’s death.

Most companies prefer to cash out the deceased employee’s plan soon after death, but certainly no more than 5 years after death. Fortunately, it is very easy to create an IRA and it is generally recommended to roll over your 401(k), 403(b), 457, etc. plan to an IRA soon after retirement.


As always, if you have any questions or would like to learn more, please contact Steve Shane at or 301.575.0313.


Steve Shane Casual Small | 301.575.0313

Steve Shane provides strategic counseling to clients in need of estate administration, charitable giving and business continuity planning while minimizing estate, gift, and generation-skipping transfer tax exposure. He offers legal guidance to clients on asset protection and the proper disposition of assets in accordance with the client’s objectives, while employing tax planning techniques such as the use of irrevocable trusts, life insurance planning, lifetime gifts and charitable trust. He is also experienced with drafting documents for business planning, the incorporation and application for exemption for Private Foundations and the administration of decedents’ estates.



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