Probate, Estate Planning & Trust Section - South Carolina Bar ...

2. The estate planning attorney is rarely asked to actually prepare or
review the designation form.
3. The beneficiary designation forms are confusing, even for attorneys.
4. Many excellent financial consultants and investment advisors know
very little about the correct choices for the client.
5. The tax laws for qualified plan and IRA distributions are complex.
II.
Income Tax Overview
A. Qualified plan and IRA distributions are controlled by IRC §401(a)(9), which
impose the “required minimum distribution” (“RMD”) rules.
B. Qualified plans, as opposed to IRAs, may have limited choices for payouts at
death. Most qualified plans require the spouse to be the beneficiary. You
must check the plan to see if it offers the payout option that suits the client’s
needs.
III.
Ten Things to Know About Beneficiary Designations
#1. The “Bible” for qualified plan and IRA distributions is Life and Death
Planning 2011 7 th Edition, by Natalie Choate. (www.ataxplan.com)
#2. If the client maintains his/her 401(k) account after retirement, it is almost
always advantageous to transfer the account to an IRA. The 401(k) plan
most likely has very limited payment options. Most IRAs offer a wide range
of options.
#3. The beneficiary designation in a qualified plan must be implemented
notwithstanding evidence of a client’s mistake or misunderstanding.
Kennedy v. The DuPont SIP, 129 S.Ct. 865 (2009). See Attachment A.
#4. Look to qualified plan and IRA distributions to fulfill charitable bequests.
#5. Take advantage of “look-through” trusts. See Attachment B.
Eugene Parrs
Plan and IRA Distributions
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