Insurance World

Here’s an estate-planning technique that allows you to lower the tax sting to your heirs, and that reduces your retirement income in case you don’t think you will need all of your Individual Retirement Account funds in retirement. It’s called a “stretch IRA,” or “Multi-generational IRA,” a complex investment tools that allow you to extend the tax-deferred status of your IRA long after your death.

By naming your children and grandchildren as the beneficiaries of your retirement assets, you enable them to stretch out the annual distributions of that IRA over the course of their lifetimes.

Structuring the stretch
There are four primary approaches to structuring a stretch IRA; the traditional, spousal-rollover, participant-direct and the mixed, or combination, approach.

In the traditional set-up, your spouse is the primary beneficiary and your children or grandchildren are the contingent beneficiaries, however distributions and income tax deferral are extended only through the life expectancy of the oldest beneficiary. By using the Spousal Rollover Approach instead, your spouse remains the primary heir and children or grandchildren become the beneficiaries with their own IRAs. This strategy allows the distributions and income tax deferrals to extend through-out the lifetime of the beneficiaries you name. That, in turn, provides significantly more tax deferral and a much longer opportunity for that IRA investment to grow.

If neither you nor your spouse need to dip into the IRA during your lifetime, you could also consider structuring your multi-generational IRA using the Participant Direct approach, which can provide the greatest tax benefit of all.

Using this strategy, you’ll be asked to break up your retirement assets into several different IRAs like the spousal rollover-except that your children and grandchildren, not your spouse, are listed as the primary beneficiaries, so you can lower the amount of the minimum distributions you are forced to take out once you hit age 70-1/2, and leave more money behind for your heirs.

Lastly, there’s the Mixed approach. A combination of strategies from the stretch IRA, it is structured as a spousal rollover with the remainder under the participant direct category. You may want to give this strategy a closer look if the surviving spouse does not need the IRA assets, but reigns while he or she is still alive. Consult a qualified financial planner experienced in Stretch IRAs for more specifics on these plans and which approach is right for you and your family.

You can freely reprint this article as long as the author, bio, and live links are left intact.

Every person who drives a car needs the protection that auto insurance can give. If you are involved in an accident in a way that make you responsible for any damage of another person or vehicle the insurance will protect you from financial ruin. All states in America require drivers to maintain liability insurance for their auto. However, this coverage does not provide much protection outside of making sure that if you should be at-fault with another driver that your insurer will step up to bat and pay the bill.

But what if you and your vehicle is damaged, will the insurance cover the expenses? There are a wide very of other coverages available, some that benefit you and some that are rarely used and probably covered by other services you already subscribe to.

If you have a newer car, or one that has a lien against it by a bank or other financial company, you are required to also maintain collision insurance. This type of coverage ensures that your vehicle will be fixed or paid off in the event that you are in an accident that damages your own vehicle and it is your fault. Another widely held coverage is called uninsured insurance. This protects you in case you are hit by a driver who does not have insurance and they are at-fault. Without this coverage it is up to you to try and collect damages from the person at-fault through the legal process which may often take years and never materialize at all.

Other coverages such as ERS (Emergency Roadside Service), rental reimbursement and accident death and dismemberment are purely optional and may hold some value if you are not already protected under another program such as AAA.

When shopping around for insurance coverage be sure to compare apples to apples for rates. It is best to compare just liability, collision and uninsured coverage and then if needed add other coverages on for peace of mind protection.