At the time of Matthews death, he was involved in the transactions described below.

Matthew was a participant in his employers contributory qualified pension plan. The plan balance of $2 million is paid to Olivia, Matthews daughter and benefi ciary. The distribution consists of the following.

Employer contributions 900,000

Matthews after-tax contributions 600,000

Income earned by the plan 500,000

Matthew was covered by his employers group term life insurance plan for employees. The $200,000 proceeds are paid to Olivia, the designated beneficiary.

a. What are the Federal estate tax consequences of these events?

b. The income tax consequences?

c. Would the answer to part (a) change if Olivia was Matthews surviving spouse (not his daughter)? Explain.