NASD Regulation, Inc., has issued an Investor Alert that cautions investors about "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" or "a way to take care of your grandchildren." Stretch IRAs "stretch" the period of tax-deferred earnings of IRA assets over multiple generations, promising potentially huge payoffs.

The Investor Alert, titled "Stretch IRAs -- Too Much of a Stretch for You?" is available on http://www.nasdr.com and points out that the enormous payoffs portrayed for stretch IRAs depend closely on the assumptions made when the returns are projected. Any change from those assumptions over the very long periods of time involved can spell a major change in what the original investor's descendants actually get.

For example, the Alert points out a number of assumptions used to project stretch IRA returns that may not be realistic for an IRA purchaser over a period of many years, such as:

* the investor will not need the IRA money,

* the investor will withdraw the smallest amount from the IRA and at the

latest time possible,

* intermediate IRA beneficiaries will die early,

* the tax laws will not change,

* there will be no inflation, and

* returns on the IRA's underlying investment will not vary.

"IRAs are an excellent -- and extremely popular -- investment tool whose tax deferred savings for retirement have helped millions of Americans save $2.5 trillion for their later years," said Mary L. Schapiro, President of NASD Regulation. "We are worried that this new twist on IRAs may be misunderstood by investors who do not realize that over the many years that a stretch IRA lasts, many things can happen to stunt the huge growth they had hoped to get for their grandchildren. Knowing that a stretch IRA's return is acutely sensitive to the assumptions being made is the first step in deciding if a stretch IRA will give you what you expect and want."

Investors can obtain more information about NASD Regulation as well as the disciplinary record of any NASD-registered broker or brokerage firm by calling 800-289-9999, or by sending an e-mail through NASD Regulation's Web Site.

NASD Regulation oversees all U.S. stockbrokers and brokerage firms. NASD Regulation, The American Stock Exchange(R), and NASD Dispute Resolution, Inc. are subsidiaries of the National Association of Securities Dealers, Inc.(NASD)(R), the largest securities-industry self-regulatory organization in the United States.