The Standby StretchIRA Trust: A New “Best Practice”

Gregory Freeman |


ADVISORSERVE presents a new, easy-toimplement “Best Practice” in the wake of the SECURE Act that could be worth millions of dollars to your high net worth clients, and potentially hundreds of thousands of dollars, to your practice. We also offer a valuable Freebie.

Executive Summary

Clients with large retirement plan assets need to consider putting in place a Standby StretchIRA Trust (“SIT”) during their life. The SECURE Act requires most inherited IRAs to be distributed and taxed within ten years of the plan owner’s death. These taxes can be extremely costly for heirs, but taxes can be deferred by use of a SIT. These trusts can result in millions more dollars for client heirs, and can enable advisors to retain millions in assets that might otherwise be lost upon a client’s death. We have identified a simple, easy, turnkey and cost effective provider: Sterling Foundation Management. We have arranged with Sterling to provide our advisor friends with a valuable Freebie.401(k)s, and several trillion more in other types of defined contribution plans.

Clients have learned that if they don’t need the money now, it’s historically been a no-brainer to defer pre-tax dollars in a tax-exempt account (we say “historically” because the prospects of higher tax brackets in the future may change the math --- but that discussion is for a future article). The benefits of tax deductible deposits and tax protected accounts is why there are trillions of dollars in qualified plans. That’s why your larger retirement plan clients have half a million, a million, or in a few cases, many millions, of dollars in their IRAs. And that’s why you’ll want to know about the Standby StretchIRA Trust. We’re getting to it.

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