What Really Replaced the Stretch IRA

Most advisors know the SECURE Act killed the stretch IRA. Fewer have evolved to understand what replaced it. And even fewer are structuring around it correctly.

Here are a few technical highlights I'm seeing as an estate planning attorney working with large IRAs.

Trust Timing

When should you name a trust as IRA beneficiary? Not every client needs a trust.

But when they do, it's usually for one of four reasons:

• Asset protection (creditors, divorce, spendthrift beneficiaries)
• Control (blended families, remarriage risk)
• Behavioral concerns (immature or at-risk beneficiaries)
• Dynasty planning (bloodline protection, divorce protection, next generation)

The problem? Most trusts aren't designed for retirement assets. And when they aren't, they accelerate taxation.

See-Through Requirements

If you're using a trust, it must qualify as a "see-through trust."

To qualify, the trust must:

• Be valid under state law
• Be irrevocable (or become irrevocable at death)
• Have identifiable individual beneficiaries
• Provide required documentation to the custodian

Miss one of these? You may lose designated beneficiary status entirely and trigger less favorable payout rules.

Conduit vs. Accumulation

This is where most plans break.

Conduit Trust:

• Forces all IRA distributions out to the beneficiary
• Preserves favorable tax treatment
• But offers little asset protection post-distribution

Accumulation Trust:

• Allows retention inside the trust
• Better for protection and control
• But introduces compressed trust tax brackets

There's no "right" answer.

Roth Strategy

Roth conversions are no longer just income planning. They're estate planning.

Here's why:

• You're pre-paying tax at known rates
• Reducing future RMD pressure
• Giving beneficiaries a tax-free 10-year window

And from a trust perspective:

• Roth IRAs avoid trust-level tax compression
• Allow deferral to year 10 ("Roth reprieve")
• Create significantly more after-tax wealth transfer efficiency

Coordination Gap

The real issue? Lack of coordination.

The CPA isn't modeling multi-year tax impact. The advisor isn't structuring beneficiary outcomes. The attorney isn't drafting for retirement assets. And the IRA, often the largest asset, gets treated as an afterthought.

Final Thought

If you're working with clients who have large retirement accounts, you're not just managing assets. You're managing timing, tax brackets, beneficiary structure, and post-death distribution strategy.

That requires coordination across disciplines. And increasingly, it requires getting the legal side right from the start.

Take a hard look at how your team is coordinating on large IRAs. The planning gaps are often hiding in plain sight.