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Contrary to popular belief, naming a trust as the beneficiary of a qualified plan such as an IRA or 401(k) is perfectly permissible and does not have to result in over-payment of income tax when funds are withdrawn. After the passage of the Secure Act and Secure 2.0 Act, the ability to pass qualified plans through trusts has become even simpler. In this course, we will review the process of naming a trust as the beneficiary of a qualified plan and how the trustee should claim and administer the account to mitigate income tax consequences for beneficiaries.
Topics Covered
- Review of the changes implemented by the Secure Act and Secure 2.0 Act as they relate to trusts named as beneficiaries of qualified plans
- Description of the types of trust terms that can trigger different payout requirements for qualified plans
- Explanation of the income tax results related to different trust provisions and how trusts can be administered to minimize tax liability
- Summary of best practices for practitioners to implement and recommend to reduce tax liability and administrative burdens
Learning Objectives
- Understand the types of trusts that can claim a qualified retirement plan
- Analyze how retirement accounts are administered when claimed by a trust named as the beneficiary of the qualified plan
- Identify the changes implemented by Secure Act and Secure 2.0 Act and the associated regulations
- Recommend administration and drafting techniques to mitigate income tax liability to trusts and beneficiaries
Level
Intermediate
Instructional Method
Group: Internet-based
NASBA Field of Study
Taxes (2 hours)
Program Prerequisites
A basic understanding of qualified plans and fiduciary income tax will be helpful for listeners to gain the most from this course.
Advance Preparation
None
Instructor
Klaralee R. Charlton
Klaralee Charlton is a Partner at 3i Law in Denver, Colorado. She practices fiduciary tax, estate administration, and business transactional law. As part of her practice, she guides clients through the process of administering a loved one’s estate including the collection, valuation, management and transfer of assets including financial accounts, real estate, and business interests with a focus on minimizing estate and income tax liability. Klaralee also works closely with trustees of ongoing trusts to ensure compliance and prepares clients’ fiduciary income tax returns annually.
Klaralee has written and lectured on topics including estate and gift tax, fiduciary income tax reporting and U.S. regulations governing the valuation of small family businesses. She is an active member of the Colorado Bar Association, Tax Section and Adjunct Profession at the University of Denver, Graduate Tax Program.
She earned her J.D. in 2011 from the University of Utah, S.J. Quinney College of Law, her LL.M. in Tax Law from the University of Denver in 2013, and her B.A. in political science in 2009 from Bryn Mawr College. She is admitted to practice in both Colorado and Montana.