Tax advice
Thus, plan benefits paid to a trust will most likely result in the funds being taxed more heavily than if the benefits were paid to individuals and taxed at the individual rates. tax advice Tax programs. Finally, any trust which is designated beneficiary which provides that the retirement funds pass as part of a pecuniary gift, which is typically found in pourover trusts with a pecuniary marital deduction formula, may result in the immediate realization of taxable income to the trust. PLR9507008. Instead, the trust should use a fractional funding formula to avoid triggering this income tax. tax advice Tax calculator payroll. IRC 2056(b)(10); Regs. 1. 691(a)-4(b)(2); PLR 9537005. tax advice File-online-taxes. QTIP Trust as BeneficiaryThere are several non-tax reasons to leave your retirement plan benefits to a QTIP Trust as opposed to outright to the surviving spouse. For instance, the plan participant may fear that, after the participant''s death, the surviving spouse will remarry and divert the assets away from the participant''s children from the first marriage. Alternatively, the surviving spouse may be unsophisticated in investing, or may be a spendthrift or may be incompetent. Since these are valid concerns, the participant must be sure that the QTIP trust qualifies for the marital deduction, that it complies with the "trust rules" so that the surviving spouse may be considered the "designated beneficiary" for purposes of the minimum distribution rules and that the trustee avoids triggering an income tax when funding the QTIP trust. In order for retirement plans payable to a QTIP trust to qualify for the marital deduction, the trustee must be required to withdraw all income earned each year on the IRA property (or the minimum required distribution if greater) and to pay such amount to the surviving spouse on an annual basis. PLR''s 9038015 and 9043054. Also, no person may have the power to appoint any of the principal to someone other than the surviving spouse during his or her lifetime. Id. The IRS has ruled that the beneficiary designation form itself should also contain similar marital deduction trust provisions.
Tax advice
Forms || Tax services || Georgia-tax-forms || Illinois state tax forms