Life and Death Planning for Retirement Benefits

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Life and Death Planning for Retirement Benefits

3.4.02 Plans subject to full-scale REA requirements................................................................. 173 3.4.03 REA requirements for “exempt” profit-sharing plans .................................................... 173 3.4.04 IRAs, Roth IRAs, and 403(b) plans ................................................................................ 174 3.4.05 Various REA exceptions and miscellaneous points........................................................ 174 3.4.06 Requirements for spousal consent or waiver .................................................................. 175 3.4.07 Spousal waiver or consent: Transfer tax aspects ............................................................ 176 CHAPTER 4: INHERITED BENEFITS: ADVISING EXECUTORS AND BENEFICIARIES ..................................................................................................................... 178 4.1 E XECUTOR ’ S R ESPONSIBILITIES ....................................................................................... 178 4.1.01 The Executor’s Road Map .............................................................................................. 178 4.1.02 Recharacterizing the decedent’s Roth conversion .......................................................... 178 4.1.03 Who can make or withdraw decedent’s IRA contribution?............................................ 180 4.1.04 Completing rollover of distribution made to the decedent ............................................. 181 4.1.05 Executor’s responsibilities regarding decedent’s RMDs ................................................ 183 4.2 P OST -D EATH T RANSFERS , R OLLOVERS , & R OTH C ONVERSIONS ................................... 185 4.2.01 How to title an inherited IRA.......................................................................................... 185 4.2.02 Post-death distributions, IRA-to-IRA transfers .............................................................. 186 A. Nonspouse beneficiary cannot roll over a distribution received......................... 186 B. Post-death IRA-to-IRA transfers permitted ........................................................ 187 C. What can go wrong ............................................................................................. 188 4.2.03 Combining inherited IRAs .............................................................................................. 189 4.2.04 Nonspouse beneficiary rollovers from nonIRA plans .................................................... 189 A. Legislative background ....................................................................................... 189 B. Types of nonIRA plans ....................................................................................... 190 C. Available only to a Designated Beneficiary ....................................................... 190 D. Direct rollovers only ........................................................................................... 190 E. Must roll to an “inherited IRA.” ......................................................................... 190 F. Applies to post-2006 post-death distributions .................................................... 191 G. Cannot use rollover to “fix” the estate plan ........................................................ 191 H. Limits on the plan’s obligations.......................................................................... 191 I. Plan must distribute RMD before the transfer .................................................... 191 J. Beneficiary’s RMDs after the transfer ................................................................ 192 4.2.05 Nonspouse beneficiary Roth conversions ....................................................................... 192 4.3 F EDERAL E STATE T AX I SSUES .......................................................................................... 194 4.3.01 Retirement benefits on the estate tax return.................................................................... 194 4.3.02 Problems paying the estate tax........................................................................................ 194 4.3.03 Alternate valuation method (AVM) for retirement benefits ........................................... 195 4.3.04 AVM, cont.: Distributions, other IRA events as “disposition”....................................... 195 4.3.05 AVM, cont.: Sale of assets inside the IRA ..................................................................... 198 4.3.06 Federal estate tax exclusion for retirement benefits ....................................................... 198 4.3.07 Valuation discount for unpaid income taxes................................................................... 198 4.3.08 Deaths in 2010: One-year “repeal” of the federal estate tax........................................... 199