Can IRA owner force a Stretch on the beneficiary
In one of the teleconferences it seemed like Ed Slott said that the Stretch IRA could be set up before death. I realize that the Owner has to name the non-spouse beneficiary as step one.
> But is there something more that can be done to force the Stretch IRA onto the beneficiary?
> Or does the beneficiary ultimately have the right to choose Stretch vs. 5 years vs. all at once? If so the onus is really on the owner to educate the beneficiary without really being certain the intended result will happen.
😕 Don
Permalink Submitted by Alan Spross on Mon, 2009-06-29 00:45
Most owners would probably opt to allow the beneficiary the full range of options by leaving the IRA outright. Among other things, when you manage from the grave, your viewpoint cannot change along with changing beneficiary requirements.
That said, the only way to deny beneficiary discretion is to leave the IRA to an irrevocable trust, and limit the distributions to RMDs or some other larger limit with trustee discretion. Beneficiary acquires some creditor protection as well. If the trust meets the requirements for look through treatment, the RMDs from the IRA to the trust will be limited to the life expectancy of the oldest trust beneficiary (aka stretch).
Permalink Submitted by Bruce Steiner on Mon, 2009-06-29 02:41
Within certain limitations under state law, the trust could even prohibit distributions entirely, and require the trustees to accumualate the IRA distributions and any other income of the trust for a very long time.
But that would be unusual. More common, and generally preferable (in my view and in the view of most of our clients) is to leave the IRA benefits (and any non-IRA assets) in trust rather than outright, and give the trustees discretion to distribute as much or as little (including the entire trust or nothing at all) at such time or times as the trustees deem appropriate. In that way, the trustees can take future circumstances into account.
Bruce Steiner, attorney
NYC
also admitted in NJ and FL
Permalink Submitted by Al Fry on Fri, 2009-07-03 19:33
However, if the annuity is variable, the bene can force distribution of the entire amount, under SEC rules. The restriced bene forms many companies use are not enfiorceable for variable annuities. But obviously, the deceased owner will not compain, nor will the bene!