Regulators Warn About New ‘Stretch’ IRAs

Regulators are warning investors about so-called stretch IRAs, a new kind of account allowed by recent changes in IRS rules. They are often billed as “estate planning techniques” or “tax aversion tools for your heirs,” NASD Regulation Inc. said in an Investor Alert issued Monday. The group is the regulatory unit of the National Assn. of Securities Dealers.

Stretch IRAs “stretch” the period of tax-deferred earnings of IRA assets over multiple generations, promising potentially huge payoffs. But those payoffs depend on the assumptions made when the returns are projected, the NASD said. Any change from those assumptions over the long periods of time involved can spell a major change in what the original investor’s descendants get.

The Investor Alert is available on the Web at https://www.nasdr.com.