# Stretch That IRA – An Example

Here’s an example of what a stretch IRA looks like.

Last week, I talked about how to calculate the Required Minimum Distribution on an inherited IRA. This week I want to show you even a small IRA can mean millions of dollars in additional income to a beneficiary.

For this example, I used the following inputs:

• Child is 10 years old when they inherit the \$10,000 Roth IRA.
• Only the RMD is withdrawn each year.
• The rate of return is 10%. NOTE: This is an average rate of return, reflective of the performance of the Dow Jones Industrial average over the last 70+ years. Past results do not predict future performance.
•  Age LifeExp AccountValue RMD 10%Growth LifeEndingBalance 10 72.8 \$10,000 \$-137 \$986 10,849 11 71.8 \$10,849 \$-151 \$1,070 11,768 12 70.8 \$11,768 \$-166 \$1,160 \$12,762 13 69.8 \$12,762 \$-183 \$1,258 \$13,837 14 68.8 \$13,837 \$-201 \$1,364 \$14,999 15 67.8 \$14,999 \$-221 \$1,478 \$16,256 16 66.8 \$16,256 \$-243 \$1,601 \$17,613 17 65.8 \$17,613 \$-268 \$1,735 \$19,080 18 64.8 \$19,080 \$-294 \$1,879 \$20,664 19 63.8 \$20,664 \$-324 \$2,034 \$22,375 20 62.8 \$22,375 \$-356 \$2,202 \$24,220 21 61.8 \$24,220 \$-392 \$2,383 \$26,211 22 60.8 \$26,211 \$-431 \$2,578 \$28,358 23 59.8 \$28,358 \$-474 \$2,788 \$30,672 24 58.8 \$30,672 \$-522 \$3,015 \$33,166 25 57.8 \$33,166 \$-574 \$3,259 \$35,851 26 56.8 \$35,851 \$-631 \$3,522 \$38,742 27 55.8 \$38,742 \$-694 \$3,805 \$41,852 28 54.8 \$41,852 \$-764 \$4,109 \$45,197 29 53.8 \$45,197 \$-840 \$4,436 \$48,793 30 52.8 \$48,793 \$-924 \$4,787 \$52,656 31 51.8 \$52,656 \$-1,017 \$5,164 \$56,803 32 50.8 \$56,803 \$-1,118 \$5,568 \$61,253 33 49.8 \$61,253 \$-1,230 \$6,002 \$66,026 34 48.8 \$66,026 \$-1,353 \$6,467 \$71,140 35 47.8 \$71,140 \$-1,488 \$6,965 \$76,617 36 46.8 \$76,617 \$-1,637 \$7,498 \$82,478 37 45.8 \$82,478 \$-1,801 \$8,068 \$88,745 38 44.8 \$88,745 \$-1,981 \$8,676 \$95,440 39 43.8 \$95,440 \$-2,179 \$9,326 \$102,587 40 42.8 \$102,587 \$-2,397 \$10,019 \$110,209 41 41.8 \$110,209 \$-2,637 \$10,757 \$118,330 42 40.8 \$118,330 \$-2,900 \$11,543 \$126,973 43 39.8 \$126,973 \$-3,190 \$12,378 \$136,161 44 38.8 \$136,161 \$-3,509 \$13,265 \$145,916 45 37.8 \$145,916 \$-3,860 \$14,206 \$156,262 46 36.8 \$156,262 \$-4,246 \$15,202 \$167,217 47 35.8 \$167,217 \$-4,671 \$16,255 \$178,801 48 34.8 \$178,801 \$-5,138 \$17,366 \$191,029 49 33.8 \$191,029 \$-5,652 \$18,538 \$203,915 50 32.8 \$203,915 \$-6,217 \$19,770 \$217,468 51 31.8 \$217,468 \$-6,829 \$21,063 \$231,693 52 30.8 \$231,693 \$-7,522 \$22,417 \$246,587 53 29.8 \$246,587 \$-8,275 \$23,831 \$262,144 54 28.8 \$262,144 \$-9,102 \$25,304 \$278,346 55 27.8 \$278,346 \$-10,012 \$26,833 \$295,166 56 26.8 \$295,166 \$-11,014 \$28,415 \$312,568 58 24.8 \$330,498 \$-13,327 \$31,717 \$348,889 59 23.8 \$348,889 \$-14,659 \$33,423 \$367,653 60 22.8 \$367,653 \$-16,125 \$35,153 \$386,680 61 21.8 \$386,680 \$-17,738 \$36,894 \$405,837 62 20.8 \$405,837 \$-19,511 \$38,633 \$424,958 63 19.8 \$424,958 \$-21,463 \$40,350 \$443,845 64 18.8 \$443,845 \$-23,609 \$42,024 \$462,260 65 17.8 \$462,260 \$-25,970 \$43,629 \$479,919 66 16.8 \$479,919 \$-28,567 \$45,135 \$496,488 67 15.8 \$496,488 \$-31,423 \$46,506 \$511,571 68 14.8 \$511,571 \$-34,566 \$47,701 \$524,706 69 13.8 \$524,706 \$-38,022 \$48,668 \$535,352 70 12.8 \$535,352 \$-41,824 \$49,353 \$542,881 71 11.8 \$542,881 \$-46,007 \$49,687 \$564,561 72 10.8 \$564,561 \$-50,608 \$49,565 \$545,549 73 9.8 \$545,549 \$-55,668 \$48,988 \$538,869 74 8.8 \$538,869 \$-61,235 \$47,763 \$525,397 75 7.8 \$525,397 \$-67,359 \$45,804 \$503,842 76 6.8 \$503,842 \$-74,094 \$42,975 \$472,723 77 5.8 \$472,723 \$-81,504 \$39,122 \$430,341 78 4.8 \$430,341 \$-89,654 \$34,069 \$374,755 79 3.8 \$374,755 \$-98,620 \$27,614 \$303,749 80 2.8 \$303,749 \$-108,482 \$19,527 \$214,794 81 1.8 \$214,794 \$-119,330 \$9,546 \$105,010 82 .8 \$105,010 \$105,010 \$0 \$0 83 0 \$0 \$0 \$0 \$0

I don’t know about you, but I think this is an awesome tool for passing on even a small amount of money. It makes much more sense than simply passing on \$10,000. Of course, there’s no guarantee that the beneficiary will withdraw only the RMD. Withdrawing more than the RMD would drastically change the outcome of this example.

## One thought on “Stretch That IRA – An Example”

1. Dave Dodson says:

The results are even more incredible if you take the RMD at the end of the year, after it also has earned that 10% rate of return, rather than at the beginning of the year as done in the table. My spreadsheet shows that the account balance maxes out at \$657,000 at age 73 instead of \$564,000 at age 72, and the total distributions are \$1,799,629 instead of \$1,416,266.