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Stretch IRA

The far-reaching possibilities of the Stretch IRA – including tax-deferred potential growth, retirement income, and legacy planning make this strategy ideal for many pre-retirees and retirees. 

Features and benefits

  • Helps investors stretch out their retirement distributions across generations
  • Keeps more money in a tax-deferred account for potential continued compounded growth
  • Allows the beneficiary to take distributions over his or her own life expectancy, which minimizes current income taxes due
  • May appeal to pre-retirees who have assets in employer-sponsored retirement plans
  • May appeal to retired individuals interested in legacy planning

Key MFS advantages

  • More than 80 mutual funds to choose from, including risk/reward based asset allocation funds and target date funds based on asset allocation strategies
  • Global asset management expertise of MFS
  • Account and fund information access via the Internet and telephone
  • Customer service representatives available from 8 a.m. to 7 p.m. ET, Monday through Friday

Rules and requirements

  • Required minimum distributions for owner must begin at age 70½
  • Most owners use joint life expectancy from the uniform IRS table

How the Stretch IRA works
When your retirement plan assets are distributed to you, the first step is to transition them into a Rollover IRA account and name your spouse or someone younger as beneficiary.  When you pass away, your spouse would roll the remaining assets into an IRA in his or her own name and name your son or daughter as beneficiary. When your spouse passes away, your son, daughter, or other relative would then name one of their children as beneficiary. If each owner and beneficiary receive only the minimum required distribution each year during their lifetimes, the IRA has the potential to provide payments for many years.

MFS does not provide legal, tax or accounting advice. Any statement contained in this communication (including any attachments) concerning U.S. tax matters, was not intended or written to be used, and cannot be used, for the purpose of avoiding penalties under the Internal Revenue Code. This communication was written to support the promotion or marketing of the transaction(s) or matter(s) addressed. Clients of MFS should obtain their own independent tax and legal advice based on their particular circumstances.

Keep in mind that all investments, including mutual funds, carry a certain amount of risk including the possible loss of the principal amount invested.

The investments you choose should correspond to your financial needs, goals, and risk tolerance. For assistance in determining your financial situation, please consult an investment professional.