Chapter 9
ESTATE AND RETIREMENT PLANNING WITH
QUALIFIED PLANS AND IRAS
LEARNING OBJECTIVES:
A. Have a basic understanding of estate and retirement planning with
qualified plans and IRAs, including advantages, disadvantages, and tax
implications.
REVIEW:
This chapter begins with a general discussion of estate and retirement planning
with qualified plans and IRAs, what it is, when to use it, and advantages and
disadvantages. A section on tax implications follows discussing the estate tax,
the marital deduction, required distributions, taxation of distributions, and an
income tax deduction for estate taxes attributable to the IRA or qualified plan.
Some issues at retirement are then discussed, including rollovers versus keeping
it in the plan, planning retirement distributions, and estate planning. The chapter
finishes with a short summary.
CHAPTER OUTLINE:
A.
B.
C.
D.
E.
E.
What Is It?
When Is It Indicated?
Advantages
Disadvantages
Tax Implications
Issues at Retirement
1. Rollover or Keep in Plan
2. Planning Retirement Distributions
3. Estate Planning
F. Summary
G. Where Can I Find Out More About It?
1
Chapter 9
H. Chapter Endnotes
FEATURED TOPIC:
Estate and retirement planning with qualified plans and IRAs
CFP® CERTIFICATION EXAMINATION TOPIC: NONE
COMPETENCY:
Upon completion of this chapter, the student should be able to:
1. Have a basic understanding of estate and retirement planning with
qualified plans and IRAs, including advantages, disadvantages, and
tax implications.
KEY WORDS:
rollover, conversion, frozen plan, required minimum distributions, beneficiary
designation
DISCUSSION:
1. Discuss the advantages and disadvantages and tax implications of
estate and retirement planning with qualified plans and IRAs.
2. Discuss rollovers versus keeping it in the plan.
3. Discuss required minimum distributions after death.
4. Discuss estate planning for qualified plans and IRAs.
QUESTIONS:
1. If the participant dies at age 60 without a designated beneficiary, minimum
distributions must be made
a. over the life expectancy for age 60 under the uniform lifetime table
b. over the life expectancy for age 60 under the single life table
Chapter 9
c. over the life expectancy for age 61 under the single life table
d. under the five year rule
Chapter 9, p. 95
2. It may be advantageous to a participant to keep retirement assets in a
qualified plan, rather than rolling assets over to an IRA, for all but which of the
following reasons?
a.
b.
c.
d.
no spousal consent requirement for IRA
investing in life insurance
PBGC insurance may be available
plan loans may be available
Chapter 9, p. 90
3. Pat is considering converting a traditional IRA to a Roth IRA in 2009. Pat
cannot make a conversion if
a.
b.
c.
d.
Pat is not married
Pat is married and files a separate return
Pat is married and files a joint return
Pat has income of $75,500
Chapter 9, p. 90-91
4. Which of the following is not a requirement for a trust to be treated as a
designated beneficiary for required minimum distribution purposes?
a.
b.
c.
d.
trust must be revocable
beneficiaries must be identifiable from trust document
documentation of trust provisions must be provided to plan administrator
trust must generally be valid under state law
Chapter 9, p. 96
ANSWERS:
1. d
2. a
3. b
Chapter 9
4. a