by KYW's Salil Gutt

In my last report, I outlined a couple of strategies for distributions from inherited Individual Retirement Accounts. There is another twist on this to create what is known as a stretch IRA.  Here's how it works.

The tax laws tell us what amounts have to be withdrawn from IRAs. They are based on the life expectancies of beneficiaries. Inherited IRAs, however, take into consideration the life expectancy of non-spousal beneficiaries.  So, passing on an account to a young person allows you to stretch the timetable over which the money can be withdrawn.

So, if parents appoint their grandchildren, or great-grandchildren if living, as beneficiaries of IRAs, you can theoretically make an IRA last for 100 years for families with good genes.

Here is an eye opening example of the benefits. A one-year-old could pull $8.2 million out of a $100,000 IRA assuming an 8% annual return over the child's lifetime.

One important point. You only want to consider a stretch IRA if you feel your children would not need the IRA money.