IRA Benefiicary (Multiple trusts)
Good Afternon
I am in need of guidance on this unusual fact pattern
FACTS:
T-IRA owner, 80, passed away in 2013
2013 RMD was taken prior to death
3 separate trusts were named as primary beneficiary – each of her three children were the 100% beneficiary of each trust
All (3) trusts qualify as a “look-through”
Inherited accounts have since been established for each trust
Beneficiary of trust #3 has since died.
Trust states the other (2) siblings inherit the assets.
QUESTIONS:
Is the deceased beneficiary subject to an RMD from the inherited IRA?
Can the siblings (beneficiary of the beneficiary) stretch the IRA? I think yes.
Whose life expectancy do the siblings use? I think it would be on the age of the deceased sibling in the year following the original accounts owner’s death. (2014) RMD’s would then follow the reduce by 1 method.
How is the account titled?
Any other information would be helpful.
Thank you,
Brian
Permalink Submitted by Alan - IRA critic on Fri, 2013-12-13 00:40
Brian, you are correct. When beneficiary of the first trust passes, the IRA of the decedent must still distribute the year of death RMD to the two remaining trusts and the RMD schdedule will continue by reducing the divisor by 1.0 each year. Account would be titled “Trusts for beneficiary’s 1 and 2 as beneficiary of the trust for beneficiary 3”. A separate inherited IRA account could be created for half the amount to each trust for 1 and 2, but could not be combined with the inherited IRAs already existing for 1 and 2’s own shares because the RMDs differ for each of the inherited IRAs controlled by each surviving beneficiary.