New law affects the treatment of distributions from retirement plans

Article Abstract:

Amendments to IRC 402 contained in the Unemployment Compensation Amendments of 1992 significantly change tax-free rollover eligibility and rollover rules for qualified retirement plans. The new rules benefit employees and surviving spouses by allowing any distribution to be eligible for tax-free rollovers, replacing the old 50% of plan minimum. However, the changes in rollover mechanics can be detrimental because unless a direct rollover from plan trustee to plan trustee is elected, all distributions are subject to 20% withholding without the previous 60 day grace period.

Laws, regulations and rules, Distribution, Qualified benefit plans, Rollovers (Finance)

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Trust powers did not trigger reciprocal trust doctrine

Article Abstract:

The 1995 US 6th Circuit Court of Appeal's Estate of Green ruling held that grandparents' retained trust powers did not have a retained economic benefit triggering the reciprocal trust doctrine, so that trust assets had been properly excluded from the grandfather's estate. The grandparents had only retained income reinvestment powers and discretion to time distributions until the beneficiaries reached adulthood.

Trusts, Funds, Trusts, and Other Financial Vehicles, United States, Trusts and trustees, Trustees, Trusts (Law)

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Antenuptial agreement didn't waive surviving spouse's right to retirement plan benefit

Article Abstract:

The Second Circuit confirmed that an antenuptial agreement that waives death benefits from employment benefit plans is not valid unless it meets the ERISA waiver requirements. Even though the waiver being considered was clear in its meaning and all parties involved agreed that there was no dispute over material facts, the agreement was found to be without legal grounds due to the lacking of ERISA requirements.

Individual retirement accounts, Prenuptial agreements

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