Common use of Estate and Gift Tax Clause in Contracts

Estate and Gift Tax. The designation of a beneficiary to receive XXX distributions upon your death will not be considered a transfer of property for federal gift tax purposes. Upon your death, the value of all assets remaining in your XXX will usually be included in your gross estate for estate tax purposes, regardless of the named beneficiary or manner of distribution. There is no specific estate tax exclusion for assets held within an XXX. After your death, beneficiaries should pay careful attention to the rules for the disclaiming any portion of your XXX under IRC Section 2518. Federal Income Tax Withholding. XXX distributions are subject to federal income tax withholding unless you or, upon your death, your beneficiary affirmatively elect not to have withholding apply. The required federal income tax withholding rate is 10 percent of the distribution. Upon your request for a distribution, by providing IRS Form W-4P or an appropriate substitute, we will notify you of your right to waive withholding or elect to have greater than 10 percent withheld. Annual Statements. Each year we will furnish you and the IRS with statements reflecting the activity in your XXX. You and the IRS will receive IRS Forms 5498 and 1099-R. IRS Form 5498 or an appropriate substitute indicates the fair market value of the account, including XXX contributions, for the year. IRS Form 1099-R reflects your XXX distributions for the year. By January 31 of each year, you will receive a report of your fair market value as of the previous calendar year end. If applicable, you will also receive a report concerning your annual RMD. Federal Tax Penalties and IRS Form 5329. Several tax penalties may apply to your various XXX transactions, and are in addition to any federal, state, or local taxes. Federal penalties and excise taxes are generally reported and remitted to the IRS by completing IRS Form 5329, and attaching the form to your federal income tax return. The penalties may include any of the following taxes:

Estate and Gift Tax. The designation of a beneficiary to receive XXX IRA distributions upon your death will not be considered a transfer of property for federal gift tax purposes. Upon your death, the value of all assets remaining in your XXX IRA will usually be included in your gross estate for estate tax purposes, regardless of the named beneficiary or manner of distribution. There is no specific estate tax exclusion for assets held within an XXXIRA. After your death, beneficiaries should pay careful attention to the rules for the disclaiming any portion of your XXX IRA under IRC Section 2518. Federal Income Tax Withholding. XXX IRA distributions are subject to federal income tax withholding unless you or, upon your death, your beneficiary affirmatively elect not to have withholding apply. The required federal income tax withholding rate is 10 percent of the distribution. Upon your request for a distribution, by providing IRS Form W-4P or an appropriate substitute, we will notify you of your right to waive withholding or elect to have greater than 10 percent withheld. Annual Statements. Each year we will furnish you and the IRS with statements reflecting the activity in your XXXIRA. You and the IRS will receive IRS Forms 5498 and 1099-R. IRS Form 5498 or an appropriate substitute indicates the fair market value of the account, including XXX IRA contributions, for the year. IRS Form 1099-R reflects your XXX IRA distributions for the year. By January 31 of each year, you will receive a report of your fair market value as of the previous calendar year end. If applicable, you will also receive a report concerning your annual RMD. Federal Tax Penalties and IRS Form 5329. Several tax penalties may apply to your various XXX IRA transactions, and are in addition to any federal, state, or local taxes. Federal penalties and excise taxes are generally reported and remitted to the IRS by completing IRS Form 5329, and attaching the form to your federal income tax return. The penalties may include any of the following taxes: