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§ 9.10 RETIREMENT PLAN ACCOUNTSBy doing this, the estate has a strong argument that the estate is entitled toboth an estate tax and an income tax charitable contribution deduction. 296Although the courts and the IRS generally are of the view that a charitablededuction should be taken on only one return or the other, a good policy argumentis that an exception should be made for IRD inasmuch as, in the absence ofa charitable gift, it would be taxed on both the estate and income tax returns.This solution is not without complications if the transfer is to a charitableplanned giving vehicle, such as a charitable remainder trust. (As explained, 297pooled income funds 298 are to be avoided.) There is ample legal authority for anestate to claim an estate tax charitable deduction for a transfer to a charitableremainder trust, but there is virtually no guidance under which an estate mayclaim an income tax charitable deduction for this type of transfer. 299EXAMPLE 9.8An estate receives a distribution in the amount of $100,000 from a retirement plan. The estate isrequired to transfer the entire amount to a charitable remainder trust that is to pay income to thedonor’s brother. The value of the remainder interest is $70,000. The estate tax return will reportthe $100,000 as an asset of the estate and will claim a charitable estate tax deduction in theamount of $70,000; the remaining $30,000 will be subject to estate tax. On the estate’s incometax return, the entire $100,000 will be reported as income. Although the estate probably couldclaim a $70,000 charitable income tax deduction, a there is no legal authority to provideguidance as to the income tax consequences of the $30,000 noncharitable distribution. Abetter way to resolve this is to keep the income in respect of a decedent off the estate’s incometax return, as discussed next.aReg. § 1.642(c)-3(a), (b).The better option for retirement plan assets is to keep the IRD off the estate’sincome tax return. This can be accomplished by having the assets transferreddirectly from the retirement plan to the charitable organization or charitableremainder trust, rather than having amounts paid to the estate. This is done bynaming the charity or the remainder trust, rather than the probate estate or a testamentarycharitable remainder trust, as the successor beneficiary on the beneficiarydesignation form provided by the retirement plan. The distributions will not bereported on the estate’s income tax return because the IRD is taxed directly to thebeneficiary that receives the assets. 300 If the income is not reported on the estate’stax return, there is no corresponding income tax charitable deduction. 301The principal complications with this strategy are the ERISA distributionrules that apply if a charitable organization or charitable remainder trust isnamed as a beneficiary, as discussed earlier. The ERISA planning strategies (forexample, a disclaimer) should therefore be used in conjunction with the incometax planning strategy of keeping income off the estate’s income tax return.296 $400,000 in Example 9.7.297 See § 9.10(c), text followed by reference to note 305.298 In general, see Chapter 13.299 Compare the detail of IRC § 2055(e) (estate tax) with the buried reference in IRC § 4947 (split-interest trusts)to IRC § 642 (income tax).300 Reg. § 1.691(a)-2(a)(2).301 Reg. § 1.642(c)-3(b). 307