Special Needs Trust as IRA Beneficiary
I have been reading some of the older posts and you guys are doing a great job here.
I read that a trust can be the beneficiary of an IRA, and that under some circumstances it can qualify for RMDs based on the age of the beneficiary.
What are the qualifying conditions, and would a special needs trust qualify for look through RMD’s? Would that risk the status of the trust as protecting the assets from recovery provisions related to government benefits paid to the beneficiary like Medicaid?
Permalink Submitted by Alan Spross on Thu, 2011-01-27 00:47
The key ruling here is PLR 2006 20015. For a SNT to be qualified it must meet the same requirements as other trusts, ie those listed in Pub 590, p 38 (09 edition). The SNT is then treated as a look through trust and RMDs are based on the non recalculated life expectancy of the SNT beneficiary.
My understanding is that the remainder beneficiary be the state Medicaid agency if the beneficiary “self settles” this trust, but need not be the state if the original IRA owner named the SNT as the IRA beneficiary.
Permalink Submitted by Stewart LaFave on Thu, 2011-01-27 00:55
Perfect, Thanks,
Permalink Submitted by Alan Spross on Thu, 2011-01-27 01:03
Here is a link of interest:
http://www.cilaw.com/index.php?p=45