Estates, Gifts, And Trusts (EGT)

Estate and Gift Tax Issues for Employee Benefit Plans (Portfolio 814)

  • This Portfolio discusses estate planning considerations relating to distributions from qualified retirement plans and individual retirement accounts (IRAs).

Description

Bloomberg Tax Portfolio, Estate and Gift Tax Issues for Employee Benefit Plans, No. 814, discusses estate planning considerations relating to distributions from qualified retirement plans and individual retirement accounts (IRAs). The Portfolio includes a general discussion of qualified retirement plans, traditional IRAs, Roth IRAs, and nonqualified deferred compensation plans. In addition, spousal rights, provided under the Retirement Equity Act of 1984, are discussed in detail.

The Portfolio explores the gift, estate, and generation–skipping transfer tax issues that arise with respect to qualified retirement plan benefits and IRAs. It also discusses income tax considerations, including the income taxation of distributions, the special income tax treatment of employer securities received as part of a distribution, income in respect of a decedent issues that arise when plan benefits and IRAs are paid to the beneficiaries of a deceased participant or account holder, rolling over inherited IRAs, and the ability to roll over distributions from qualified retirement plans into IRAs and other qualified retirement plans.

The Portfolio examines the various penalty taxes that may apply to a distribution from a qualified retirement plan or IRA, including the 10% additional income tax on premature distributions and the 50% excise tax on the amount of a minimum required distribution that is not made to a participant.
The Portfolio covers in detail planning for the receipt of qualified retirement plan benefits and IRAs, including the naming of a beneficiary while the participant is still active, the optimum method of receiving distributions from a qualified retirement plan or IRA once the participant reaches his or her required beginning date, and the various options available to the executor or beneficiary of a deceased participant or account holder’s estate to reduce or defer taxes. The Portfolio concludes with a discussion of estate planning for non-qualified plan benefits.

The Worksheets include tables to be used with the final regulations on required minimum distributions, sample language for beneficiary designations and trust agreements for trusts intended to be recipients of qualified retirement plan benefits and IRAs, and a workshop problem designed to answer the most frequently asked questions in this area.

This Portfolio may be cited as Mezzullo, 814 T.M., Estate and Gift Tax Issues for Employee Benefit Plans.

Table of Contents

I. Background
II. Transfer and Income Taxes; Penalty Taxes
III. Planning

Louis Mezzullo
Consulting Partner
Withersworldwide
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