Life and Death Planning for Retirement Benefits

Table of Contents

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7.5 S EVEN “W HICHES ”: T YPES OF C HARITABLE E NTITIES .................................................. 368 7.5.01 Suitable: Public charity ................................................................................................... 368 7.5.02 Suitable: Private foundation............................................................................................ 368 7.5.03 Suitable: Donor-advised fund ......................................................................................... 369 7.5.04 Suitable: Charitable remainder trust ............................................................................... 369 7.5.05 Income tax rules for CRTs; IRD deduction .................................................................... 370 7.5.06 Solving planning problems with a CRT.......................................................................... 373 7.5.07 Reasons NOT to leave benefits to a CRT ....................................................................... 376 7.5.08 Suitable: Charitable gift annuity ..................................................................................... 377 7.5.09 Usually unsuitable: Charitable lead trust ....................................................................... 378 7.5.10 Unsuitable: Pooled income fund ..................................................................................... 378 7.6 L IFETIME G IFTS OF R ETIREMENT B ENEFITS ................................................................... 379 7.6.01 Lifetime gifts from distributions ..................................................................................... 379 7.6.02 Give your RMD to charity .............................................................................................. 380 7.6.03 Gifts from a pre-age 59½ “SOSEPP” ............................................................................. 381 7.6.04 Gift of NUA stock........................................................................................................... 381 7.6.05 Gift of other low-tax lump sum distribution ................................................................... 382 7.6.06 Give ESOP qualified replacement property to CRT....................................................... 382 7.6.07 Qualified Charitable Distributions .................................................................................. 382 7.6.08 Planning uses and pitfalls of QCDs ................................................................................ 384 7.7 P UTTING IT A LL T OGETHER ............................................................................................. 386 CHAPTER 8: INVESTMENT ISSUES; PLAN TYPES ....................................................... 387 8.1 IRA S : I SSUES FOR I NVESTORS .......................................................................................... 387 8.1.01 Various investment issues for IRAs................................................................................ 387 A. IRA contributions, distributions, rollovers ......................................................... 387 B. Prohibited transaction from standard brokerage account form........................... 387 C. IRA and nonIRA transactions matched for wash sale purposes ......................... 388 8.1.02 Investment losses and IRAs ............................................................................................ 388 8.1.03 Restoring lawsuit winnings to IRA................................................................................. 390 8.1.04 Paying, deducting, IRA investment expenses................................................................. 390 8.1.05 IRAs owning “nontraditional” investments .................................................................... 391 A. Partnerships......................................................................................................... 392 B. Hedge funds and other “private” investments .................................................... 393 C. S corporation stock ............................................................................................. 393 D. Real estate ........................................................................................................... 394 E. Active business ................................................................................................... 394 8.1.06 IRAs and prohibited transactions.................................................................................... 394 8.2 IRA S AND THE T AX ON UBTI ........................................................................................... 397 8.2.01 UBTI: Rationale, exemptions, returns, double tax, etc................................................... 397 8.2.02 Income from an IRA-operated trade or business ............................................................ 397 8.2.03 When investment income becomes UBTI ...................................................................... 398 8.2.04 Income from debt-financed property .............................................................................. 398

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