Life and Death Planning for Retirement Benefits

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Life and Death Planning for Retirement Benefits

Avoid some rollover requirements with IRA-to-IRA transfer ..........................................157 2.7 T HE 60- DAY R OLLOVER D EADLINE .........................................................................................158 Computation of the 60 days.................................................................................................158 Does the deadline apply to direct rollovers? ......................................................................159 How does the deadline apply to lost checks? .....................................................................159 Non-hardship exceptions to the 60-day deadline ...............................................................160 A. First-time homebuyer ..............................................................................................160 B. Disaster-based extensions .......................................................................................160 C. Qualified reservist distribution ...............................................................................160 D. Frozen deposits ........................................................................................................160 E. Automatic waiver for certain financial institution errors ......................................161 Hardship waivers of 60-day rollover deadline: General ....................................................161 Hardship waiver, method #1: Self-certification .................................................................162 Hardship waiver, method #2: Apply to the IRS .................................................................164 3.1 C ONSIDERATIONS FOR M ARRIED P ARTICIPANTS ....................................................................170 Road Map: Advising the Married Participant ....................................................................170 Road Map: Advising the Surviving Spouse .......................................................................171 Simultaneous death clauses .................................................................................................172 3.2 S POUSAL R OLLOVER ; E LECTION TO T REAT D ECEDENT ’ S IRA AS S POUSE ’ S IRA ................173 Advantages and drawbacks of spousal rollover .................................................................173 Spousal rollover: QRPs and 403(b) plans...........................................................................174 Rollover (or spousal election) for IRA or Roth IRA .........................................................175 A. Spousal election: Code and regulations..................................................................175 B. Spousal election for inherited Roth IRA ................................................................175 C. Conditions that must be met....................................................................................176 D. How spouse makes the election ..............................................................................176 E. When spousal election may be made......................................................................177 F. Rollovers also permitted..........................................................................................177 Roth conversion by surviving spouse .................................................................................177 Rollover or election by spouse’s executor ..........................................................................178 Deadline for completing spousal rollover...........................................................................178 Plans the spouse can roll benefits into ................................................................................179 Rollover if spouse is under age 59½ ...................................................................................180 Spousal rollover through an estate or trust .........................................................................181 3.3 Q UALIFYING FOR THE M ARITAL D EDUCTION .........................................................................183 Road Map: Leaving Benefits to Spouse or Marital Trust ..................................................183 Leaving retirement benefits to a QTIP trust .......................................................................184 IRS regards benefits, trust, as separate items of QTIP ......................................................185 Entitled to all income: State law vs. IRS ............................................................................186 Ways to meet the “entitled” requirement; Income vs. RMD.............................................187 Distribute all income to spouse annually ............................................................................189 CHAPTER 3: MARITAL MATTERS...........................................................................................170