Article on Retirement Benefits in the Context of Estate Planning

Lewis Saret (Federal Tax Attorney, Washington D.C.) recently published an article entitled, Retirement Benefits in the Context of Estate Planning - Part III: Income Taxation of qualified Rollovers; Current Estate and Gift Tax Developments, The Estate Planner, (May 2012). Provided below is the introduction to his article:

This is the third in a series of columns that addresses retirement benefits in the context of estate planning. The first column discussed the minimum required distribution (MRD) rules that apply to qualified retirement plans (herein referred to as “QRPs”).1 The second column discussed income taxation of payments from qualified retirement plans where the participant or account owner has basis associated with his/her QRP interest. This column is divided into two parts. Part I discusses taxation resulting from qualified rollovers from one retirement plan to another, with emphasis on both QRP-to-IRA rollovers and IRA-to-IRA rollovers.

Part II it discusses some important tax developments relevant to estate planning, including the transfer tax provisions included in President Obama’s FY 2013 budget proposal. Among other things, in Part I, this column defines direct and indirect (or “60-day”) rollovers, outlines the requirements for valid rollovers, and explains, in general terms, the differences between taxable and nontaxable rollovers. Additionally, it discusses the specific tax consequences imposed by rollovers, whether performed by the participant, the spouse, or a non spousal beneficiary. Future columns will discuss Roth IRA conversions, which are not discussed in this column.