Life and Death Planning for Retirement Benefits

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Life and Death Planning for Retirement Benefits

 The plan must prohibit the assignment or alienation of benefits (the “ anti-alienation rule ”). § 401(a)(13)(A) . See ¶ 4.4.09 (A), ¶ 6.1.05 (A).

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The plan must contain provisions required by REA. See ¶ 3.4 .

Roth IRA. See ¶ 5.2.01 .

SEP-IRA, SIMPLE

Simplified Employee Pensions (SEP-IRAs, or SEPs) and Simple Retirement Accounts (SIMPLEs) are employer-funded IRAs ( ¶ 8.3.08 ). SEPs are created under § 408(k) . SIMPLEs are created under § 408(p) . These plans were designed by Congress to be retirement plans that a small business could adopt without having to hire a lawyer. From the point of view of the estate planner advising an individual SEP-IRA or SIMPLE participant or beneficiary, the rules are generally the same as the rules for “regular” (traditional) IRAs, with the following exceptions: The premature distributions penalty for a distribution from a SIMPLE is increased to 25 percent in case of distributions within the first two years of participation in a salary reduction (elective deferral; ¶ 8.3.02 ) arrangement; see § 72(t)(6) , and ¶ 9.1.02 . Employer contributions (including the employee’s contributions via elective deferral) to a SEP-IRA or SIMPLE have no effect on the participant’s personal IRA contribution limits. ¶ 5.3.03 . As employer-funded plans, SEPs and SIMPLEs may be subject to ERISA requirements that otherwise do not apply to IRAs. ERISA aspects of these and all other plans are beyond the scope of this book. See also ¶ 2.4.02 (regarding lump sum distributions), ¶ 3.4.04 (regarding spousal rights), and ¶ 5.4.01 (A) (regarding Roth conversions).

Traditional IRA. See ¶ 8.3.08 .

Trusteed IRA. See ¶ 8.3.08 , ¶ 6.1.07 .