Retirement Plan Distributions to Trusts

Loftsgard, Gary A.
July 2003
Journal of Financial Planning;Jul2003, Vol. 16 Issue 7, p64
Academic Journal
The article demonstrates how retirement planning and estate planning can be applied together wherein an integrated planning approach can make each more effective by their incorporation than if applied alone. Sweeping proposed regulations concerning the Comprehensive Retirement Security and Pension Reform Act of 2001 were issued on January 11, 2001, which had a significant impact on the minimum distribution rules for retirement plans. As a result of the new rules, plan beneficiaries may now realize a greater deferral benefit through the single-life recalculations and increased divisor numbers that equate to longer tax-deferred growth periods than previously available under the old laws. In this discussion, references to trusts are a general reference to revocable living trusts (RLT)--although not exclusively. As noted earlier, trusts must satisfy certain requirements to be deemed a designated beneficiary trust. Grantors will often name their favorite charities as beneficiaries of their trusts. Regardless of whether a qualified plan owner designates his or trust as a beneficiary of the plan, the value of the plan will be includable in his or her estate for transfer tax purposes.


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