When you go to open an IRA account you will probably find that there are several variations. One variation of an individual retirement account (IRA) is a stretch IRA.  This concept is used to pass the proceeds from an IRA to younger generations rather than to your spouse or peers.   IRA owners must begin receiving distributions by the age of 70 and ½.  The distributions are based on the life expectancy of the owner.  Older owners will have a greater required minimum distribution (RMD) while younger owners will have a much smaller RMD.

Comparing the RMD of a retiree who is 73 years old, versus the grandchild of an individual with a stretch IRA, you will see how the money saved in the original IRA could potentially last two or more lifetimes.  A good example is looking at how a $500,000 IRA would be distributed.  The original owner would be required to take a minimum distribution of a little over $20,000.  If this same IRA was inherited by a child, and that child was 55 years old, their minimum distribution would be around $17,000.  If instead of a child, it was a 28 year old grandchild that inherited the IRA, they would have to take a minimum distribution of approximately $9000.  If the grandchild was only 6 years old, that distribution would be around $7000 per year.

The amount of the distributions is based on the IRS Single Life Expectancy Table.  Potentially, depending on the amount accumulated in the IRA and the lifespan of the beneficiaries, the stretch IRA could span several generations.  If the stretch IRA is a traditional IRA or a Roth IRA both will benefit from tax deferred growth even if the distributions are being directed to a beneficiary.  Traditional IRA distributions will be taxed as ordinary income and Roth distributions are usually tax free.

This product has the capacity of passing on supplemental income that grows tax deferred to future generations, stretching the IRA’s proceeds significantly.  This is especially true if the rate of growth for the IRA is consistent year after year and decade after decade.  It also opens up a new means of passing on one’s wealth without the dealing with the burdensome process of probate and the estate taxes associated with probate.

You can open a self directed IRA at and pay no fees. Open your No-fee* IRA with a 401K Rollover, IRA Transfer or ROTH Conversion. Traditional, Roth, SEP and Simple IRA accounts are all available at Lending Club. To qualify for a No-Fee IRA through SDIRA Services you must have an initial minimum balance of $5,000 or more in Lending Club Notes and maintain this minimum invested balance for the first 12 months. To continue to qualify for the No-Fee IRA after the first year, you must maintain an invested balance of $10,000 or more in Lending Club Notes. All account balances are determined as of the last business day immediately prior to the anniversary date of the opening of your account. An annual fee of $100 applies to accounts that don’t meet these requirements. Lending Club reserves the right to modify or discontinue this offer at any time. See the SDIRA Services IRA Fee Schedule for a description of the Basic IRA asset type limitations on your Lending Club Self-Directed IRA Account.

If you make eligible contributions to an employer-sponsored retirement plan or to an individual retirement arrangement, you may be eligible for a tax credit, depending on your age and income.

Here are six things the IRS wants you to know about the Savers Credit:

1. Income limits The Savers Credit, formally known as the Retirement Savings Contributions Credit, applies to individuals with a filing status and 2011 income of:

Single, married filing separately, or qualifying widow(er), with income up to $28,250
Head of Household with income up to $42,375
Married Filing Jointly, with incomes up to $56,500

2. Eligibility requirements To be eligible for the credit you must be at least 18 years of age, you cannot have been a full-time student during the calendar year and cannot be claimed as a dependent on another person’s return.

3. Credit amount If you make eligible contributions to a qualified IRA, 401(k) and certain other retirement plans, you may be able to take a credit of up to $1,000 ($2,000 if filing jointly). The credit is a percentage of the qualifying contribution amount, with the highest rate for taxpayers with the least income.

4. Distributions When figuring this credit, you generally must subtract distributions you received from your retirement plans from the contributions you made. This rule applies to distributions received in the two years before the year the credit is claimed, the year the credit is claimed, and the period after the end of the credit year but before the due date – including extensions – for filing the return for the credit year.

5. Other tax benefits The Retirement Savings Contributions Credit is in addition to other tax benefits you may receive for retirement contributions. For example, most workers at these income levels may deduct all or part of their contributions to a traditional IRA. Contributions to a regular 401(k) plan are not subject to income tax until withdrawn from the plan.

6. Forms to use To claim the credit use Form 8880, Credit for Qualified Retirement Savings Contributions.

FiPath is an online site that provides comprehensive, independent, unbiased retirement planning content and analytical tools so consumers can take control of their retirement planning. They recently released a new tool to help those who need to roll over their 401k to an IRA. The FiPath Express Rollover Center is the only tool of its kind in the industry. No other product enables the consumer to compare multiple options, based on their own interests and criteria, to select the perfect rollover solution for them. The FiPath Express Rollover Center is comprehensive, informative and easy to use. Within a few minutes a consumer can find the right option for them, saving hours of tedious research.

The FiPath Express Rollover Center lets you choose whether you would like to work with a financial advisor or financial services firm when you rollover your 401k to IRA. If you want you can choose expert financial advisor access since not all consumers want to manage the 401k rollover process on their own. For them, they have created the option to search through a universe of financial advisors chosen specifically for their expertise in helping consumers handle a 401k rollover. All advisors are presented based on distance to a consumer’s zip code. When using the tool you can reach out to up to 5 advisors, who will then contact you via phone or email depending on which you prefer. You can then select which of the advisors you wish to work with. You are in complete control of the process at all times. You can select who you want to work with or whether you want to work with anyone. If you decide not to work with an advisor, you will not be bothered with any followup phone calls or emails. All advisors have been screened by FiPath for expertise on rollovers.

You can also choose to work with a financial services firm. For consumers who wish to minimize costs, the ability to find a brokerage or mutual fund firm to work with directly is a great way to keep expenses down. FiPath allows consumers to search based on their interests, such as the existence of local branches or different investment vehicles, to find the firm that best meets their needs. All firms are presented based on average annual trading costs, from lowest to highest. All firms are compared apples-to-apples on relevant metrics – cost, products offered, annual fees, account minimums, etc — so consumers can quickly and easily compare firms. FiPath has given each firm a “FiPath Score”, which compiles scores from multiple industry sources (JD Powers, Barrons, etc) as well as FiPath’s own evaluation of each firm’s offering. Some firms are highlighted as best for specific types of investors – “First Time Investors”, for instance, or “Active Traders”. This is based on FiPath’s independent evaluation of each firm’s offering. When a firm makes a specific offer for new accounts, FiPath has included that too so the consumer can always get the best deal.

It is important that you spend time on your 401k retirement planning. You can save a lot of money by rolling over your 401k to an IRA. Depending on the employer, you may pay hundreds of dollars a year in management and custodial fees for keeping your money in an ex-employer’s 401k plan. Money in a 401k plan can only be invested in employer-selected investment funds. With an IRA, you have full control of your money. Because of the lower fees and broader choices that an IRA enables, money invested through an IRA will typically grow at a higher rate of return. This could mean tens of thousands of dollars more in an IRA savings account upon retirement. If you are looking to convert a 401k you need to check out the FiPath Express Rollover Center.

Prosper.com, a peer-to-peer lending marketplace for personal loans and investments, announced that investors seeking consistent and predictable high-yield returns in their retirement accounts can now open a new or rollover IRA at Prosper.com and earn industry-leading 10.46%1 tax deferred returns.

Traditional, Roth, SEP and 401(k) rollovers are eligible for investing in a Prosper IRA. The minimum investment requirement is $5,000. The federal deadline to fund a Prosper.com IRA is Tuesday, April 17, 2012. Prosper will pay your IRA service fees, which are due to your IRA custodian upon account opening, if your Prosper IRA (i) has an initial balance of $5,000 or more in Prosper Notes within two months of opening, and (ii) maintains this balance throughout the year. Prosper will continue to pay your IRA service fees after the first year if (i) your IRA has an invested balance of $10,000 or more in Prosper Notes as of the first business day immediately after the anniversary date of the opening of your account, and (ii) maintains a balance of at least $10,000 in Prosper Notes throughout the year. An annual fee from your IRA custodian applies to accounts that don’t meet these requirements. Prosper reserves the right to modify or discontinue this offer at any time.

The idea of investing in peer-to-peer loans to fund your retirement is interesting but I wouldn’t too large a percentage of my retirement savings in P2P loans. If you would like to open a Prosper IRA or get more information you can click on the affiliate link below.

2012 Combined Traditional and Roth IRA Contribution Limits

If you are under 50 years of age at the end of 2012: The maximum contribution that you can make to a traditional or Roth IRA is the smaller of $5,000 or the amount of your taxable compensation for 2012. This limit can be split between a traditional and a Roth IRA but the combined limit is $5,000. The maximum contribution to a Roth IRA and the maximum deductible contribution to a traditional IRA may be reduced depending upon your modified adjusted gross income (modified AGI).

If you are 50 years of age or older before the end of 2012: The maximum contribution that can be made to a traditional or Roth IRA is the smaller of $6,000 or the amount of your taxable compensation for 2012. This limit can be split between a traditional and a Roth IRA but the combined limit is $6,000. The maximum contribution to a Roth IRA and the maximum deductible contribution to a traditional IRA may be reduced depending upon your modified AGI. This information is from IRS.gov which has lots of good information about retirement accounts.

I had articles in the following carnivals in the past week.

Yakezie Carnival at Prairie Eco Thrifter
Carnival of Financial Camaraderie at My University Money
Totally Money at Family Money Values
Festival of Frugality at The Frugal Toad
Carnival of Financial Planning at Skilled Investor Blog
Carnival of Retirement at Retire By 40

When you open a new Savings IRA July 1st or 2nd and deposit at least $1,000 by July 8th you can receive a $76 bonus. Your $76 bonus will be automatically posted on July 12th. You must first be an ING DIRECT Customer before opening an IRA. The bonus is considered a 2011 contribution and counts towards your annual IRA contribution limit. Therefore bonuses can not be paid to customers who have fully maximized their 2011 contributions. The bonus will be reported to the IRS on form 5498 and you must have earned income in 2011 to qualify. 1.00% Variable Annual Percentage Yield effective as of 7/1/2011. There is no need to enter a Reference Code or anything when you open your Savings IRA. You can view more details about their Financial Independence day bonuses. If you like the offers please consider clicking through my affiliate link to open your account. It won’t cost you anything and will make me a little money.
Thanks.

Lending Club is offering a cash bonus of up to 3% to IRA investors. IRA investors may be eligible to receive a 1% cash bonus for a transfer, rollover or contribution of $10,000 or a 2% cash bonus for a transfer, rollover or contribution of $50,000 or a 3% cash bonus for a transfer, rollover or contribution of $100,000. To receive the bonus, all funds must be (1) newly transferred between March 15, 2011 and April 30, 2011, (2) eligible funds must be continuously maintained in your Lending Club account and (3) eligible funds must be fully invested on the Lending Club primary platform market by May 31, 2011. Existing account balances and transfers prior to program enrollment date do not count towards satisfaction of the investment requirements needed to earn this bonus. The transferred funds that qualify for this bonus offering will be locked for investment purposes only and unavailable for withdrawal from the eligible Lending Club account. Limit one bonus per tax ID and a maximum bonus of $7,500 per tax ID.

Visit Lending Club
for more information or to open an account.

Now through December 31, 2010, Lending Club IRA users can receive up to a 3% cash bonus when they make an additional transfer and investment through their Lending Club IRA.

Rollover, transfer, convert or contribute an additional:

* $5,000 and receive a 1.5% cash bonus
* $25,000 and receive a 2% cash bonus
* $50,000 and receive a 2.5% cash bonus
* $100,000 and receive a 3.0% cash bonus

* To receive your bonus, all funds must be newly transferred between the date you enrolled in the program (but not earlier than November 15, 2010) and December 31, 2010, continuously maintained in your Lending Club account and fully invested on the Lending Club platform by January 31, 2011. Existing account balances and transfers prior to your program enrollment date will not be counted towards satisfaction of the necessary transfer amount to earn this bonus. Your bonus, if any, will be deposited into your account or mailed to your address on file by February 15, 2011. Program may be discontinued at any time without notice. Failure to fully invest the new funds by January 31, 2011 will result in your not qualifying for this bonus. Transactions in the secondary market (the trading platform operated by FolioFN) do not count as “investing funds” towards earning the bonus. This bonus payment, if earned, is taxable so please consult with your personal tax advisor. You are responsible for any taxes related to this offer. Void where otherwise prohibited. This offer may not be combined with any other offer.