Problem: How to coordinate assets in several retirement accounts for tax efficiency upon retirement.

        Strategy: Consider a “stretch” IRA.

        Charlotte Dougherty, certified financial planner with Dougherty & Associates, says that stretching retirement assets can lower income and estate taxes.

        Say you are 60 and ready to retire. You have $300,000 of retirement assets in three employer-sponsored retirement plans and two IRAs. You want to leave some to charity and the rest to your two children.

        Upon retirement, you can roll over your retirement plan benefits into traditional IRAs, consolidating your assets so that you have three IRAs of $100,000 each. You name one child beneficiary of the first IRA, and the other as beneficiary of the second IRA, and the charity as beneficiary of the third IRA.

        If you postpone distributions until you are required to take them at age 70 1/2, the IRAs may have each grown, say, to $250,000. So based on your life expectancy, you would have to withdraw about $49,000 a year from the three IRAs.

        However, for two of the IRAs, you could base the distributions on your and your children's joint life expectancy. Using a joint life payout reduces the total minimum required annual distribution from the IRAs to about $36,000 — a $13,000-a-year difference.

        After your death, your children must continue to receive taxable distributions. But the taxes will be spread out over the years the payments are received.

        The charity, on the other hand, can withdraw all of the assets from its IRA without paying any income tax. Many charities are tax-exempt and thus don't have to pay income tax on distributions received from a donor's retirement plan.

        Readers: Consider Savvy Strategies as general information only and seek the help of professionals because circumstances might vary.

        Planners: Share your unique strategies with Enquirer readers. Send your Savvy Strategies to Amy Higgins, 312 Elm St., Cincinnati 45202 or e-mail ahiggins@enquirer.com.

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