Is your situation such that you are a trust beneficiary and the trust was named as beneficiary of the IRA?

If so, the tax rate paid on IRA distributions depends on the trust provisions. A conduit trust would simply pass the IRA distributions to the beneficiaries on a K1 and taxes would be at the beneficiary’s marginal rate each year. However, if the trustee has discretion to accumulate income in the trust, and the trust pays the taxes with the 1041, the tax rate will hit 35% at 10,450 in taxable income. A trust must also have specific provisions to qualify for look through treatment so that the oldest trust beneficiary’s life expectancy can be used to stretch out IRA distributions.

• Flag as spam
• Log in to Reply