Can I create a stretch IRA with any financial instuition, including my brokerage house?
The answer is that generally banks, insurance companies and a few brokerages houses offer stretch IRAs. Be careful, however, because there are some issues and risks depending on where you place your IRA money. The safest place is with an insurance company. They have many years of experience in distributing money to multiple beneficiaries over several generations. The issue with banks and brokerage houses is the fees they charge you. In the case of brokerage houses, the national average is 2% – 3% paid annually in brokerage fees. What can happen is that the brokerage house can make more in fees each year than the payouts to the beneficiaries. Banks also charge fees to manage your IRA account. Insurance companies do not charge fees for stretch IRA’s. The second issue relates to required minimum distributions. Brokerage houses are not set up to manage distributions over several generations. By their own admission, they do not have and generally cannot easily track the birthdates of severa
Related Questions
- What information should I review with financial professional in determining whether a "Stretch" IRA is appropriate?
- Does a high level of trading in the account create a cause of action against the broker and the brokerage house?
- Can I create a stretch IRA with any financial instuition, including my brokerage house?
