stretch IRA distributions
Can one take out more from a stretch ira than the required minimum amount? And if so, are they subject to the 10% penalty that they normally would be under regular IRA laws? Client is currently in their 30’s and wanted to take money of out a beneficial IRA to help out a family member.
Thanks in advance,
Michael J. Sicuranza, CFP
Permalink Submitted by Kristin Kippen on Wed, 2008-01-30 23:58
If the account is a beneficiary account (i.e. the account was inherited by a non-spouse beneficiary or the spouse chose to keep it as an inherited account) then they are allowed to take whatever amount they want to and not be subject to the 10% penalty. The 1099R form should be issued from the institution with a code 4 that shows it is a distribution due to death and therefore the 10% penalty is not applicable. If the beneficiary is a spouse and the spouse rolls over the IRA to their own IRA, then this is not an option.