Life and Death Planning for Retirement Benefits

Table of Contents

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Do not require stub income to be paid to spouse’s estate! ................................................189 Combination marital deduction-conduit trust.....................................................................190 General Power marital trust .................................................................................................190 Automatic QTIP election for “survivor annuities” ............................................................190 Marital deduction for benefits left outright to spouse........................................................191 3.4 REA ’84 AND S POUSAL C ONSENT ...........................................................................................191 Introduction to the Retirement Equity Act of 1984 ...........................................................192 Plans subject to full-scale REA requirements ....................................................................192 REA requirements for “exempt” profit-sharing plans .......................................................192 IRAs, Roth IRAs, and 403(b) plans ....................................................................................193 Various REA exceptions and miscellaneous points...........................................................194 Requirements for spousal consent or waiver ......................................................................194 Spousal waiver or consent: Transfer tax aspects................................................................195 CHAPTER 4: INHERITED BENEFITS: ADVISING EXECUTORS AND BENEFICIARIES ............................................................................................................................................................197 4.1 E XECUTOR ’ S R ESPONSIBILITIES ..............................................................................................197 The Executor’s Road Map ...................................................................................................197 Recharacterizing the decedent’s Roth conversion .............................................................197 Who can make or withdraw decedent’s IRA contribution? ..............................................199 Completing rollover of distribution made to the decedent ................................................200 Executor’s responsibilities regarding decedent’s RMDs...................................................202 4.2 P OST -D EATH T RANSFERS , R OLLOVERS , & R OTH C ONVERSIONS ...........................................204 How to title an inherited IRA ..............................................................................................204 Post-death distributions, IRA-to-IRA transfers..................................................................205 A. Nonspouse beneficiary cannot roll over a distribution received...........................205 B. Post-death IRA-to-IRA transfers permitted ...........................................................206 C. What can go wrong..................................................................................................207 Combining inherited IRAs...................................................................................................208 Nonspouse beneficiary rollovers from nonIRA plans .......................................................208 A. Legislative background ...........................................................................................208 B. Types of nonIRA plans............................................................................................209 C. Available only to a Designated Beneficiary ..........................................................209 D. Direct rollovers only................................................................................................209 E. Must roll to an “inherited IRA.” .............................................................................209 F. Applies to post-2006 post-death distributions .......................................................210 G. Cannot use rollover to “fix” the estate plan ...........................................................210 H. Limits on the plan’s obligations..............................................................................210 I. Plan must distribute RMD before the transfer .......................................................210 J. Beneficiary’s RMDs after the transfer ...................................................................211 Nonspouse beneficiary Roth conversions...........................................................................211 4.3 F EDERAL E STATE T AX I SSUES .................................................................................................213 Retirement benefits on the estate tax return .......................................................................213