Note that this episode was recorded prior to the effective date of SECURE 2.0 which allows for 529 funds to be rolled into Roth IRAs in certain circumstances.

Trust terminations can become complicated when beneficiaries decide to go their separate ways and break up the trust. The IRS views this transaction as a sale of the interest in the trust for cash or assets and a gain is triggered. In this episode of the PFP Section podcast, Bob Keebler, CPA/PFS, interviews expert Ed Morrow, JD, LL.M. They share:

When IRC Section 1001(e) kicks in
How the interest is calculated for the life and other beneficiaries
When the basis is determined to be zero for the income beneficiary
Many examples to make the scenarios and implications clear
What tax preparers need to make sure they know

Access resources related to this podcast: Note: If you’re using a podcast app that does not hyperlink to the resources, visit https://pfplanning.libsyn.com/pfp to access show notes with direct links.

Find Bob Keebler’s latest decision charts in the Proactive Planning Toolkit.
Learn more about trust planning in the Adviser’s Guide to Financial & Estate Planning.

This episode is brought to you by the AICPA’s Personal Financial Planning Section, the premier provider of information, tools, advocacy, and guidance for professionals who specialize in providing tax, estate, retirement, risk management and investment planning advice. Also, by the CPA/PFS credential program, which allows CPAs to demonstrate competence and confidence in providing these services to their clients. Visit us online to join our community, gain access to valuable member-only benefits or learn about our PFP certificate program.

Subscribe to the PFP Podcast channel at Libsyn to find all the latest episodes or search “AICPA Personal Financial Planning” on your favorite podcast app.

What to watch out for with trust terminations {PFP Sections}

AICPA Personal Financial Planning (PFP)