> Stuart Br>>> Starting for distributions made after 2006. See
>>> §402(c)(11), which apparently applies to IRA's as well as
>>> other kinds of pension trusts.
>> But to clarify they can't technically roll it over into
>> THEIR OWN account, right? Doesn't it have to be an IRA of
>> the decedent for the benefit of the beneficiary? It can't be
>> trustee-to-trustee transferred into the beneficiaries
>> existing IRA. Is that correct?
> I asked Steve Honeyman CPA, an instructor for the Spidell
> Tax Seminars (California taxes), at a seminar this past
> Friday. After bemoaning the lack of proper planning, he
> told me that the son as trustee could direct the life
> insurance company holding the money to distribute it to The
> Inherited IRA of Son and The Inherited IRA of Daughter. IRC
> 408 allows it. The benficiaries of the trust are clearly
> known and can be determined.
I guess this is the end of the story. Last week I met with an executive of the insurance company holding the annuities and IRAs. He was very familiar with the new law allowing non-spouse beneficiaries to roll annuities into an inherited IRA. As a tax attorney and estate planner he also knows that the trust could be disregarded in this situation and the money passed directly to the trust beneficiaries. Well, don't you know that as soon as I passed this good news on to my client, he answers me back that he had taken distribution of the entire contents of all the retirement accounts and the checks had come in the mail. He is under the impression that he will owe only another $10,000. Sorry dude - add another zero to that figure. The income is from tax sheltered funds and is fully taxable. Don't you just love it when your clients do exactly what you tell them not to? Linda Dorfmont E.A., CFP, CSA
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