New and Powerful Opportunities to Plan with IRAs
and other Retirement Assets

Continued from previous page
Federal Law provides protection for most qualified plans. Protections for IRAs are a matter of state law. Most, if not all, states, provided that IRAs are exempt. However, there is a growing body of law questioning the exemption of inherited IRAs.

Recent IRS regulations, recent IRS rulings, and the Pension Protection Act of 2006 mean that for the first time you can create a Trust and name it the beneficiary of an IRA!

IRA Trusts, also known as Retirement Plan Trust, allow clients to combine IRA Stretchouts with the many benefits and protections of trusts! The Retirement Plan Trust is superior to just putting the IRA into a revocable living trust (RLT) with beneficiary designation language since it is harder to violate the tax-free growth status of the IRA, which can happen in an RLT if, a non-individual beneficiary (e.g. a charity) is named, if certain formula language is built into the trust, if powers of appointment are built into the trust, or if certain language regarding the payment of debts, expenses, and taxes of the estate is built into the RLT.

Properly designed Retirement Plan Trusts can be split into subtrusts for separate beneficiaries, such as for several children or grandchildren, and they can each maximize their own stretchout based on their individual life expectancies. These Retirement Plan Trusts can provide very powerful stretchouts.

The Retirement Plan Trusts can also provide a number of powerful estate tax planning opportunities.

Finally, creditors, predators, and former spouses of your children and grandchildren will find it more difficult to penetrate the Retirement Plan Trust than the typical IRA and its beneficiary designation.

Important Note: Whether you designate individuals or designate a Retirement Plan Trust as the beneficiary of your retirement assets, properly drafted beneficiary designations are crucial to ensure that your retirement assets are distributed in ways that are consistent with your estate plan.

This information was prepared by Lena Barnett & Associates, LLC and is intended only to provide general information. It is neither offered nor intended for use as legal advice, nor is it a substitute for a consultation with an attorney.

© 2008 Lena Barnett & Associates, L.L.C. All Rights Reserved

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