Life and Death Planning for Retirement Benefits

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CHAPTER 4: INHERITED BENEFITS: ADVISING
EXECUTORS AND BENEFICIARIES
Considerations that apply in administering and distributing
retirement plan benefits after the participant’s death.
This Chapter examines tax considerations that apply after the death of a retirement plan
participant; it deals with inherited retirement benefits. It begins with the “Executor’s Road Map”
and ends with the “Beneficiary’s Road Map” See also (tax effects of
plan loans outstanding on the date of death) and (death benefits exempt from the 10%
“early distributions” penalty).
In this Chapter, unless otherwise specified, the “executor” means the executor,
administrator, or personal representative of the estate of a deceased retirement plan participant.
4.1 Executor’s Responsibilities
This discusses an executor’s responsibilities that are uniquely related to the
decedent’s retirement benefits.
4.1.01 The Executor’s Road Map
Here are matters an executor needs to consider with respect to the decedent’s retirement
benefits that do not arise with respect to other assets. If the estate is the beneficiary of any of the
decedent’s retirement plans, the executor should also review the “Beneficiary’s Road Map,
 Whether the executor can or should “recharacterize” any traditional or Roth IRA
contributions made by the decedent.
 Whether the executor may make contributions (or withdraw contributions made) on the
decedent’s behalf to an IRA.
 Whether the executor should seek to “roll over” any retirement plan distributions made to
the participant prior to his death.
 Whether the decedent took all “required minimum distributions” he was supposed to take,
and if not, what the executor must do about it if anything.
 How to report retirement benefits on the participant’s federal estate tax return and pay the
estate tax
 Whether the executor can or should disclaim any retirement benefits on the decedent’s
behalf. See C) an
4.1.02 Recharacterizing the decedent’s Roth conversion
explains Roth IRAs, how they differ from “traditional” IRAs, and how an
individual, after having made a contribution to one type of IRA, can change his mind and
“recharacterize” the contribution so it is deemed to have been contributed to the other type (see