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Gorin Memo Sec. 409 changes 1 (April 29, 2008)

handle is hein.nccusl/nccpub01191 and id is 1 raw text is: THOMPSON COBURN Thompson Coburn LLP Memorandum To: ABA RPTE Council and ACTEC Executive Committee From: Steven B. Gorin Phone 314-552-6151; E-mail SGORIN@thompsoncoburn.com Date: April 29, 2008 Re: Distributions from IRAs and Other Retirement Plans to Marital Trusts: Proposed Changes to the Uniform Principal & Income Act Below is what I sent to Cathy Hughes: As we discussed, Revenue Ruling 2006-26 (the Ruling) criticized Section 409 of the Uniform Principal & Income Act (UPIA). Even before the Ruling, the Internal Revenue Service's safe harbor for marital deductions for retirement plans payable to trusts required special language in those trusts, even if those trusts themselves are drafted in a manner that ordinarily qualified for the marital deduction. I am working on proposed changes to UPIA § 409 that are to be submitted to the American Bar Association's Real Property, Trust & Estate Law Section (RPTE) and the American College of Trust & Estate Counsel (ACTEC) for their recommendation that the Uniform Law Commission (ULC) adopt these changes. These changes attempt to satisfy not only the Ruling's literal terms but also the policy behind the Ruling's position that might be applied to other situations. My understanding is that the Internal Revenue Service (the Service) and the Department of Treasury (Treasury) will not rule on such changes before they are adopted by the ULC. This makes it difficult for us to fashion changes to model laws to address the Service's and Treasury's concerns. To help us come as close as we can to satisfying these concerns without obtaining a formal ruling, I would appreciate informal indications that these changes address the concerns of Rev. Rul. 2006-26, with the full understanding that such informal indications would not commit the Service or Treasury to any particular course of action and could not be relied upon by taxpayers for any purpose. I have already talked with Mary Berman, who is the Ruling's author, and George Masnik, her Branch Chief. They indicated that any informal indications they might give would provide no assurance with respect to issues not addressed in the Ruling. These issues include the treatment of defined benefit plans payable to marital deduction trusts and whether certain types of retirement plan benefits might not be suitable for being held by a marital deduction trust. Thus, my goal is limited to obtaining informal indications that the proposed changes satisfy the situations that the Ruling addressed. You will see that the proposed changes also address other scenarios that concern those with whom I have discussed these issues. 4706779 -1I-

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