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e. A bond purchase plan described

Rules applicable to all approved

by treating the distribution as taxable

plans. The following rules apply to all

in section 405 (before its repeal by P.L.

on his or her income tax return as

98-369, effective for obligations issued

approved plans described in

described in Regulations section

after December 31, 1983).

paragraphs (a) through (h) above.

20.2039-4(d). The election is

Exclusion rules for pension, etc.,

irrevocable.

If any part of an annuity under a

plans. If an annuity under an

“plan” described in (a) through (h)

“approved plan” described in (a)

above is receivable by the executor, it

The amount excluded from the gross

through (e) above is receivable by a

is generally includible in the gross

estate is the portion attributable to the

beneficiary other than the executor and

estate to the extent that it is receivable

employer contributions. The portion, if

the decedent made no contributions

by the executor in that capacity. In

any, attributable to the

under the plan toward the cost, no part

general, the annuity is receivable by the

employee-decedent’s contributions is

of the value of the annuity, subject to

executor if it is to be paid to the

always includible. Also, you may not

the $100,000 limitation (if applicable), is

executor or if there is an agreement

includible in the gross estate.

compute the gross estate in

(expressed or implied) that it will be

accordance with this election unless

If the decedent made a contribution

applied by the beneficiary for the

you check “Yes” on line A and attach

under a plan described in (a) through

benefit of the estate (such as in

the name, address, and identifying

(e) above toward the cost, include in

discharge of the estate’s liability for

the gross estate on this schedule that

number of the recipients of the lump

death taxes or debts of the decedent,

proportion of the value of the annuity

etc.) or that its distribution will be

sum distributions. See Regulations

which the amount of the decedent’s

governed to any extent by the terms of

section 20.2039-4.

contribution under the plan bears to the

the decedent’s will or the laws of

total amount of all contributions under

descent and distribution.

How To Complete Schedule I

the plan. The remaining value of the

If data available to you does not

annuity is excludable from the gross

In describing an annuity, give the name

indicate whether the plan satisfies the

estate subject to the $100,000 limitation

and address of the grantor of the

requirements of section 401(a), 403(a),

(if applicable). For the rules to

annuity. Specify if the annuity is under

408(a), 408(b), or 409(a), you may

determine whether the decedent made

an approved plan.

obtain that information from the IRS

contributions to the plan, see

office where the employer’s principal

Regulations section 20.2039-1(c).

IF . . .

THEN . . .

place of business is located.

IRAs and retirement bonds. The

following plans are approved plans for

the annuity is under an

state the ratio of the

Line A. Lump Sum

the exclusion rules:

approved plan,

decedent’s contribution

Distribution Election

to the total purchase

f. An individual retirement account

price of the annuity.

Note. The following rules have been

described in section 408(a),

repealed and apply only if the

g. An individual retirement annuity

the decedent was

state the ratio of the

decedent:

described in section 408(b), or

employed at the time of

decedent’s contribution

•

death and an annuity as to the total purchase

On December 31, 1984, was both a

h. A retirement bond described in

described in Definitions, price of the annuity.

participant in the plan and in pay status

section 409(a) (before its repeal by P.L.

Annuity, Example 4,

(for example, had received at least one

above, became payable

98-369).

benefit payment on or before December

to any beneficiary

Exclusion rules for IRAs and

31, 1984) and had irrevocably elected

because the beneficiary

retirement bonds. These plans are

survived the decedent,

the form of the benefit before July 18,

approved plans only if they provide for

1984, or

a series of substantially equal periodic

•

Had separated from service before

an annuity under an

state the ratio of the

payments made to a beneficiary for life,

individual retirement

amount paid for the

January 1, 1985, and did not change

or over a period of at least 36 months

account or annuity

individual retirement

the form of benefit before death.

after the date of the decedent’s death.

became payable to any

account or annuity that

beneficiary because that was not allowable as an

Generally, the entire amount of any

Subject to the $100,000 limitation, if

beneficiary survived the income tax deduction

lump sum distribution is included in the

applicable, if an annuity under a “plan”

decedent and is payable under section 219 (other

decedent’s gross estate. However,

to the beneficiary for life than a rollover

described in (f) through (h) above is

under this special rule, all or part of a

or for at least 36 months contribution) to the total

receivable by a beneficiary other than

following the decedent’s amount paid for the

lump sum distribution from a qualified

the executor, the entire value of the

death,

account or annuity.

(approved) plan will be excluded if the

annuity is excludable from the gross

lump sum distribution is included in the

estate even if the decedent made a

recipient’s income for income tax

the annuity is payable

the description should

contribution under the plan.

out of a trust or other

be sufficiently complete

purposes.

However, if any payment to or for an

fund,

to fully identify it.

If the decedent was born before

account or annuity described in

1936, the recipient may be eligible to

paragraph (f), (g), or (h) above was not

the annuity is payable

include the duration of

elect special “10-year averaging” rules

allowable as an income tax deduction

for a term of years,

the term and the date

(under repealed section 402(e)) and

under section 219 (and was not a

on which it began.

capital gain treatment (under repealed

rollover contribution as described in

section 402(a)(2)) in computing the

section 2039(e) before its repeal by

the annuity is payable

include the date of birth

income tax on the distribution. For more

P.L. 98-369), include in the gross

for the life of a person

of that person.

information, see Pub. 575, Pension and

estate on this schedule that proportion

other than the decedent,

Annuity Income. If this option is

of the value of the annuity which the

available, the estate tax exclusion

amount not allowable as a deduction

the annuity is wholly or

enter the amount

cannot be claimed unless the recipient

under section 219 and not a rollover

partially excluded from

excluded under

elects to forego the “10-year averaging”

contribution bears to the total amount

the gross estate,

“Description” and

explain how you

and capital gain treatment in computing

paid to or for such account or annuity.

computed the exclusion.

the income tax on the distribution. The

For more information, see Regulations

recipient elects to forego this treatment

section 20.2039-5.

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Part Instructions

Instructions For Form 706 - United States Estate (And Generation-Skipping Transfer) Tax Return - 2011 Page 24

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