Can a stretch IRA occur from a PSP from dad?
Facts: Dad had profit sharing plan as well as a traditional IRA and a Roth IRA. Dad named trust his primary beneficiary and spouse contingent beneficiary due to incapacity of spouse. Children were named trustees. Mom predeceased dad by 6 months. Dad died 10/11/07. Dad’s DOB is 11/11/1935. He took his first RMD in 2007. Is there any way to transfer the PSP to the traditional IRA and do a stretch IRA for the two children? Or, should consideration be made to transfer the qualified plan to a Roth IRA? Value of PSP is $1,200,000.
Thanks,
Larry
Permalink Submitted by Bruce Steiner on Tue, 2008-04-29 19:01
Depending on the terms of the plan, and of the trust, it may be possible to stretch the plan benefits out over the life expectancy of the oldest beneficiary of the trust.
For more on trusts as beneficiaries, see my article on this subject in the March 2004 issue of the BNA Tax Management Estates, Gifts & Trusts Journal: http://www.kkwc.com/docs/AR20041209132954.pdf
For $1.2 million, the family should consult with tax/estates counsel, who can give them specific advice based upon the facts and their objectives. There are some decisions that they have to make within 9 months of death, which is coming up soon, so they should consult with counsel soon.
Bruce Steiner, attorney
NYC
also admitted in NJ and FL