Tax Planning for Retirees

Chapter 1 summarizes the tax planning ideas and techniques in the treatise. A retiree may use some of these ideas and techniques at retirement and use others during retirement years. Chapter 1 also summarizes tax-saving techniques available for beneficiaries.

Chapter 2 discusses the federal tax treatment of retiree benefits from qualified plans and section 403(b) plans (i.e., tax-sheltered annuities or TSAs). Chapters 3 and 4 explain the taxation of benefits from certain eligible plans established by tax-exempt organizations and state or local governments. Chapters 5, 6 and 7 discuss retirees’ use of individual retirement accounts (IRAs and Roth IRAs), and designated Roth accounts. All these types of plans or arrangements enjoy tax-favored treatment to some extent.

Chapter 8 explains requirements for minimum distributions of retirement benefits to retirees and their beneficiaries. These requirements apply in varying degrees to benefits from all the types of tax-favored plans and arrangements mentioned in the preceding paragraph. Chapters 9 and 10 explain the taxation of benefits from “non-qualified” employer retirement plans (i.e., from plans that generally do not enjoy favored treatment for tax purposes).

Retirees and those about to retire may possess unexpired employee stock options. They may also possess employer stock previously acquired through the exercise of employee stock options. Chapter 11 discusses the treatment of such options and stock still in the hands of retirees. Chapter 12 explains the differing tax treatment of partners and sole proprietors under various types of retirement plans.

Of course, retirees do not necessarily derive all their retirement income from their previous employers or from tax-favored employer plans or other such arrangements. For example, some retirees receive part of their retirement income under annuity contracts they have personally purchased from insurers. Chapter 16 discusses the taxation of benefits under these purchased annuity contracts. Most retirees also derive some retirement income from social security benefits. Chapter 17 discusses the taxation of social security benefits.

An individual receiving long-term disability payments may be in a situation comparable to that of a retiree. Chapter 13 explains, however, the substantially different tax rules applicable to disability payments. Similarly, Chapter 14 discusses the substantially different tax rules applicable to military retirement pay and disability pay. Chapter 15 deals with the tax treatment of certain employee fringe benefits that may continue to be available during retirement years.

The final four chapters discuss the tax treatment of long-term care expenses and insurance, federal gift and estate taxes on retirement benefits, the taxation of retirement benefits paid to foreign retirees, and other miscellaneous tax provisions affecting retirees.

The treatise also contains an extensive glossary of the tax terms used.