Help pack a million meals for struggling seniors on Sept. 11. Volunteer today



Contests and

Driver Safety

Piggy bank on the road - AARP Driver Safety

Take the new AARP Smart Driver Course!

Happy African American couple

AARP Books

Visit the Books Section

Enjoy titles on retirement, Social Security, and becoming debt-free.

Jobs You Might Like

most popular



How to Stretch an IRA

Future generations can profit, but many beneficiaries take the money and run

Robotic arms stretching US dollar bill

Stretching an inherited IRA

If you're the person who is willed an IRA, here's what you need to do to make it stretch.

"When you inherit an IRA, the first rule is, touch nothing," says Slott. "If you roll the inherited IRA into your own IRA or even move it to another institution, the money instantly becomes taxable."

As the beneficiary, you must retitle the IRA with your name and the deceased's name. For example, "John Doe IRA (deceased Jan. 1, 2010) for the benefit of John Doe Jr., beneficiary."

You must begin withdrawals of the required minimum distribution (RMD) starting on Dec. 31 of the year after you inherit. They'll be taxable. Their amount is calculated by dividing the IRA's balance by the number of years of your life expectancy as determined by the IRS. The younger you are, the smaller the RMD.

If you want to stretch the IRA to a third generation and potentially make the account bigger, take out only the RMDs and try to invest the remaining principal wisely. As Slott puts it, you have to decide if you want the IRA to grow: "Do you want a little twig or a big tree?" he says.

Not all IRAs stretch

But not every stretch IRA is destined to become a tree. Reyes says that conditions that determine an account's continued growth may change. For example, IRS rules may evolve, returns on principal may vary, or a beneficiary may take out more than the minimum.

"Nine out of 10 beneficiaries want to take the money and run," says Reyes, so "stretching" never gets started.

A stretch IRA "looks good on paper," he says, "but too often doesn't translate into reality."

Cathie Gandel is a freelance writer based in Bridgehampton, N.Y.

Also of interest: Who inherits the cottage by the lake? >>

Topic Alerts

You can get weekly email alerts on the topics below. Just click “Follow.”

Manage Alerts


Please wait...

progress bar, please wait

Tell Us WhatYou Think

Please leave your comment below.


The Cheap Life

Jeff Yeager Cheap Life Ultimate Cheapskate AARP YouTube web series save money

Catch the latest episode of The Cheap Life starring Jeff Yeager, AARP's Ultimate Cheapskate. Watch

Discounts & Benefits

From companies that meet the high standards of service and quality set by AARP.

Member Benefits HomeServe

Members can protect their homes with comprehensive repair plans from HomeServe.

AARP Credit card from Chase

Members can get cash back rewards on purchases with the AARP® Credit Card from Chase.

Woman holding smartphone in city, Google map tool

Members can find discounts on the go via the AARP® Member Advantages Offer Finder app.

Member Benefits

Join or renew today! AARP members receive exclusive member benefits & affect social change.

Rewards for Good

Your Points Balance:

Learn More

Earn points for completing free online activities designed to enrich your life.

Find more ways to earn points

Redeem your points to save on merchandise, travel, and more.

Find more ways to redeem points


Advance your skills. Transform your career.

Explore your learning possibilities.