Estates and Trusts Commons^™

How The Über-Wealthy Benefit From Investing Outside Retirement Plans (And How You Can Too), Sergio Pareja

Catholic University Law Review

Current law incentivizes the use of traditional retirement plans, but those plans may not actually produce the best long-term tax situation for the taxpayer. The stepped-up basis at death does not apply to what is known as “income in respect of a decedent” (IRD). Generally, IRD is income that cannot be assigned from one person to another for income tax purposes. This includes pre-tax income set aside in a traditional employer-sponsored retirement plan, such as a 401(k) plan, as well as contributions to a deductible individual retirement account (IRA). Thus, stock held within a traditional employer-sponsored retirement plan or a …