Are there Special Considerations for my Tax Deferred Retirement Accounts (IRAs)?

August 8, 2017

  Individual Retirement Accounts (IRAs) need to be handled in a very special manner. Because these accounts usually pass to a designated beneficiary other than to the decedent's estate, they are not subject to probate. However, if the named beneficiary is the decedent's estate, trust, or a corporation, rather than an individual, the account will have to be liquidated and the income taxes owing paid in full. 
  This may be avoided, and any beneficiary, not just one's spouse, may roll over the decedent's retirement account to their own account and postpone the income tax. 
  See this article below regarding the Pension Protection Act of 2006:


Same-sex pairs to benefit under new Pension Law / Provision allows nonmarried beneficiaries to postpone taxes (Source)
by Wyatt Buchanan, Chronicle Staff Writer
Friday, August 18, 2006
Article appeared on page A - 4 of the San Francisco Chronicle

Same-sex couples will be able to save on taxes starting next year under a massive overhaul of U.S. pension rules signed into law Thursday by President Bush. 

The law includes a provision that will allow "nonspousal beneficiaries," including same-sex partners, to roll over inherited retirement plans if their partner dies. That option, previously available only to married couples, can mean hundreds of thousands of dollars -- or maybe even more -- in tax savings for a beneficiary. 

Bush called the Pension Protection Act of 2006 "the most sweeping reform of America's pension laws in over 30 years." 

The law, which allows nonmarried beneficiaries to roll over retirement money into an IRA without paying taxes until the money is withdrawn, becomes effective Jan. 1. It will also benefit workers who name relatives other than spouses as beneficiaries. 

Congress "was probably not thinking that this would be a big benefit for the gay and lesbian community, but the fact of the matter is that it is. It is one of the greatest benefits of marriage under the Internal Revenue Code," said Teresa Renaker, an Oakland attorney who specializes in pension and employee-benefits litigation. 


People who have already designated a nonspousal beneficiary in their retirement plans will be covered by the new law. 

When Gerry Goeres' partner died in 1999, Goeres had to fight for 15 months to get his partner's company to recognize him as a beneficiary. Then he had to pay about half the retirement savings -- nearly $250,000 -- in taxes. 

"I knew I would be hit with taxes, yes. Did I think they (would be) what they were? No, because I somehow thought I would be able to roll it over from one account to another," said Goeres, who is suing his partner's employer over the delay. 

The signing of the bill also marks the first benefit, albeit tangential, for gays and lesbians to be passed by Congress in more than a decade, said Joe Solmonese, president of the Human Rights Campaign, a gay and lesbian rights organization. It also is the first change in the tax code to help same-sex couples, he said 

The group has lobbied members of Congress on this issue for four years, Solmonese said, and received bipartisan support. 

"We had some people who were motivated to help GLBT families, others who were less motivated to help our community. But they all understood the need to strengthen families and that families come in all shapes and sizes," he said.



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