Important Changes

Rollovers by surviving spouses. For distributions after 2001, an employee's surviving spouse who receives an eligible rollover distribution may roll it over into an eligible retirement plan, including an IRA, a qualified plan, a section 403(b) annuity, or a section 457 plan. For distributions before 2002, surviving spouses could only roll the distribution over into an IRA.

Assets held on January 1, 2001. If the estate held certain assets on January 1, 2001, you can treat the assets as being sold and reacquired on the same date. Any gain on the deemed sale must be recognized and included in income. This treatment allows future gains on those assets to be taxed at a rate of 18% (instead of 20%) if the asset is held by the estate for more than 5 years from the reacquired date. For more information, see the instructions for Schedule D of Form 1041.

Estate tax return. Generally, if the decedent died during 2001, an estate tax return (Form 706) must be filed if the gross estate is more than $675,000. If death occurs in 2002, Form 706 must be filed if the gross estate is more than $1,000,000.

Estate tax repeal. The estate tax is repealed for decedents dying after 2009.

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