IRS Releases Guidance on Spouse Beneficiaries and QTIP Elections

May 8, 2006 – The IRS released Revenue Ruling (Rev. Rul.) 2006-26, addressing the issue of marital trusts being named as beneficiaries of IRAs or defined contribution plans. At issue in this guidance is when a surviving spouse will be treated as having a “qualifying income interest for life” in the plan (or IRA) assets as well as the marital trust, and thus be able to elect to treat both the plan (or IRA) assets and the marital trust as qualified terminable interest property (QTIP). 

Rev. Rul. 2006-26 may be accessed as follows. http://www.irs.ustreas.gov/pub/irs-drop/rr-06-26.pdf