Life and Death Planning for Retirement Benefits

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the regulation has been amended several times since then, including after these other things became
effective (most recent amendment was in 2009), and this particular provision was not changed.
Therefore the conclusion is that someone should try this and let the rest of us know how it
turns out.
11.5.06 The “dream” charitable rollover
Charities dream of a “charitable IRA rollover” law that would allow lifetime transfers
directly from an IRA to a charity or charitable remainder trust under certain conditions. This would
enable the charitably-inclined individual to fund his charitable intentions immediately with IRA
funds; he would get no tax deduction, but also would not have to report the IRA distributions as
gross income.
Though as allowed, temporarily (2006–2014 only), some limited direct IRA-
to-charity transfers, this was a far cry from the law envisioned by charities, under which (if ever
enacted) a charitably-inclined participant could transfer his IRA to a charitable remainder trust
(CRT). The CRT would receive the funds income tax-free, then pay a unitrust or annuity income
to the participant for his life, then to his spouse for her life. When both spouses died, the funds
would pass to the participant’s chosen charity. For requirements and advantages of a CRT, see
and
The participant and spouse would get a life-long stream of income that would be somewhat
steadier than an RMD payout from an IRA (and also would be longer-lasting, if they live into their
mid 90s or beyond), and satisfy their charitable intent. No income or estate taxes would ever be
paid on the IRA balance (though the annual distributions from the CRT would be taxable). The
spouses could provide a replacement asset for their descendants by buying life insurance (via gifts
to an irrevocable trust) with some of the income stream they received from the CRT. The life
insurance also would never be subject to income tax or estate tax.
However, this is still just a pipe dream.
11.6 Bibliography for Chapter 11
See generally, Zaritsky, H., and Leimberg, S.L., Tax Planning with Life Insurance, Warren,
Gorham & Lamont.
The best one-volume reference work for ERISA questions is The Pension Answer Book,
by Stephen J. Krass, Esq.; new edition published annually. The Pension Answer Book is geared
towards employers and plan administrators and their advisors. Chapter 15 deals with life insurance
in plans. A Panel Publication of Aspen Publishers, Inc., 7201 McKinney Circle, Frederick, MD
21704, 800-638-8437;
For an excellent discussion of life insurance in the retirement plan, see Beverly R. Budin,
Esq., Life Insurance, T.M. 826.
Regarding “subtrusts,” see:
“The Qualified Plan as an Estate Planning Tool,” by Andrew J. Fair, Esq., booklet
distributed by Guardian Life Insurance Co. Of America, 201 Park Ave. South, New York, NY
10003.
“Estate Tax on Life Insurance Held in Qualified Plans,” by Mervin M. Wilf, Esq., in
Retirement Plan Trio seminar 6/22/95, materials published by ALI-ABA, 4025 Chestnut St.,
Philadelphia, PA 19104-3099 (Publ. No. Q239).