Revocable trust as IRA beneficiary
Is a revocable living trust considered a conduit trust for the purpose of stretching an IRA for the trust beneficiaries?
Is a revocable living trust considered a conduit trust for the purpose of stretching an IRA for the trust beneficiaries?
Permalink Submitted by Alan Spross on Sat, 2009-11-21 18:13
It could be if it contains provisions requiring the RMDs or other distributions to be passed through to the beneficiaries instead of accumulating in the trust after the death of the trustor. To preserve the stretch however, the IRA distribution needs to be limited to the RMD amount or some other limited amount that will preserve IRA assets.
Permalink Submitted by Bruce Steiner on Sun, 2009-11-22 02:44
It depends on the terms of the trust. But conduit trusts generally don’t make much sense. If the beneficiary lives to life expectancy, which will happen 50% of the time, nothing will be left in the trust, where the assets would have been better protected against potential creditors (including spouses), and would have been kept out of the beneficiary’s estate for estate tax purposes.
For more on this subject, see my article on trusts as beneficiaries of retirement benefits in the March 2004 issue of BNA Tax Management’s Estates, Gifts & Trusts Journal: http://www.kkwc.com/docs/AR20041209132954.pdf.