We have a trust that will terminate this year due to the age of the two beneficiaries. According to the trust agreement they are now an age whereby they can receive all remaining trust property and the trustee has agreed to terminate the trust.

Included is a beneficiary IRA – their father is deceased, and he appointed the trust as his beneficiary. Concerning distributions from the beneficiary IRA, we have been taking distributions based on the life expectancy of the oldest beneficiary. The IRA account will now be split into two beneficiary IRA accounts (‘looking through’ the trust…) for each of the children since the trust is terminating. One beneficiary 34 years old, the other is 31.

Question: Will each IRA now have its own RMD calculation based on the life of each beneficiary regardless of what was done in the past? Or, will each beneficiary continue to take funds each from their respective beneficiary IRA based on the life expectancy tables of the oldest beneficiary under the trust agreement?

Follow up question: Will the trust’s termination and subsequent distribution to another beneficiary IRA (now for the girls) cause the IRA assets to become fully taxable in any way?

Thank you!

Chris