- quote -

That's what I mean by their own accounts.

Linda

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Rich <f86hdv$gj6$1[at]panix3.panix.com> wrote:
- quote -

Perhaps OP is thinking of a fairly recent change allowing
nonspousal beneficiaies who begin their distributions by
the end of the year following death, to scrap the 5 year rule
and use their life expectancies for the first year, and add
one year to the denominator each year, to determine their
distributions.

- quote -

Go you one better. Say the traditional IRAs they have and
also the inherited IRAs have nondeductioble amounts in them.
That could require multiple 8606s and possibly prevent efiling.

Their own traditional IRAs have their own distinct 8606 and
inherited IRAs with basis have their own, and different, 8606s.

--
ArtKamlet at a o l dot c o m Columbus OH K2PZH

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"DORFM...[at]aol.com (Linda Dorfmont)" <DORFM...[at]aol.com> wrote:

- quote -

What do you mean by "their own accounts"? We just had to go
through this this year, and every bit of information we were
able to find, from IRS Publication 590, to documents from
the brokers involved, all very clearly and explicitly stated
that the named non-spouse beneficiary of an IRA cannot move
or roll over the funds into their own IRA. The beneficiary
either has to leave it in the financial institution that the
decedent's IRA was at, or else open a special Inherited IRA
account at the custodian of the beneficiary's choice and
fund that Inherited IRA via a trustee-to-trustee transfer.

--
Rich

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DORFM...[at]aol.com (Linda Dorfmont) wrote:

- quote -

This is another great example of how we, as preparers, try
to find all kinds of ways to DELAY the taxation of inherited
IRAs and annuities. But, in the final analysis, most heirs
just want to get their hands on the money ASAP.

MTW

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"DORFMONT[at]aol.com (Linda Dorfmont)" <DORFMONT[at]aol.com> wrote:

- quote -

I hope you have that advice to them in writing.

Stu

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"DORFM...[at]aol.com (Linda Dorfmont)" <DORFM...[at]aol.com> wrote:
- quote -

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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kastnna <kast...[at]auburnalum.org> wrote:
- quote -

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.

Linda Dorfmont E.A., CFP, CSA

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kastnna <kastnna[at]auburnalum.org> wrote:
- quote -

Right. It doesn't need to have been set up by the decedent,
but a separate IRA set up for this specific purpose.

Stu

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Stuart Bronstein <spamt...[at]lexregia.com> wrote:
- quote -

As of today's tax seminar...the successor trustee of the
trust can direct the custodian of the IRA and annuities to
pay them out to the "Inherited IRAs" of the beneficiaries.
Non-spousal beneficiaries of IRAs have been able to roll
their inherited IRAs into their own accounts for several
years. Now, for deaths occurring on or after 1/1/2007, they
can do the same with annuities. The annuities came from a
403b plan since the decedent was a retired teacher.

Linda Dorfmont E.A., CFP, CSA

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"kastnna" <kastnna[at]auburnalum.org> wrote:

- quote -

Correct. To avoid problems make sure the receiving
custodian understands it's an inherited IRA.

--
Phil Marti
Clarksburg, MD

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Stuart Bronstein <spamt...[at]lexregia.com> wrote:

- quote -

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?

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"ramscot[at]gwtc.net" <ramscot[at]gwtc.net> wrote:

- quote -

Starting for distributions made after 2006. See
§402(c)(11), which apparently applies to IRA's as well as
other kinds of pension trusts.

Stu

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"(Linda Dorfmont)" <DORFM...[at]aol.com> wrote:

- quote -

Since when can a non-spouse beneficiary roll an inerited IRA
into their own account? I am aware of the change for a
deceased employee's retirement plan for a non-spousal
beneficiary, but am unaware of any changes for traditional
IRA's.

Robert A Moore, EA

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DORFMONT[at]aol.com (Linda Dorfmont) wrote:

- quote -

To be clear to other readers who may not be as familiar with
the intricacies of IRA rules; the destination accounts must
be properly titled, "Inherited IRA of JoeTaxpayer,
beneficiary", and NOT, I repeat, not rolled into an existing
non-beneficiary account. That would break the IRA and it
would be deemed distributed.

- quote -

What was the source of the money? If it was from a 403(b) or
other retirement plan, perhaps, but I don't believe this can
be done with any and all annuities.

JOE

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<DORFM...[at]aol.com> wrote:

- quote -

None of this money can be rolled into their IRA's; only a
spouse can keep an IRA as an IRA--everyone else must cash
them in, although they can sign up for equal, periodic
payments.

If the tax rate for the Trust will be the same regardless of
the amount withdrawn (25%?), then it would depend on the
client's opinion of the annuities and how they were
performing.

IRS Circular 230 Disclosure: To comply with requirements
imposed by the IRS, we inform you that any U.S. federal tax
advice contained herein (including any attachments), is not
intended or written to be used, and cannot be used, for the
purposes of (i) avoiding penalties under the Internal
Revenue Code or (ii) promoting, marketing or recommending to
another party any transaction or matter herein.

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DORFMONT[at]aol.com (Linda Dorfmont) wrote:

- quote -

How will they do that? Has there been a recent change in
the law? (I'll ask IRS on Tuesday.)

- quote -

An annuity is not eligible. Just count them lucky to be able
to spread it out over the five years.

ChEAr$,
Harlan

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My client's deceased father left him and his sister his
retirement accounts. Two of them are IRAs which I will
advise the clients to rollover into their own accounts.

There are three annuities which have the Trust as the
beneficiary. The annuity company told the son that he could
take the money all at once or over 5 years.

Could they take a distribution with code 4 for death and
then roll it over into their own IRAs without going trustee
to trustee?

Linda Dorfmont E.A., CFP, CSA

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