RMDs and Trusts

Submitted by Jason Hochstadt on Fri, 2014-09-26 13:50

Hello,

1. For someone who has a pension plan (Defined Benefit plan), are RMDs required and based upon the same tables as contained within IRS Publication 590? Are RMDs not required if the individual is working past 70 1/2 and owns less than 5% of the company (or has no ownership)? Where are the RMD rules for pensions/DB Plans contained (e.g. for 401ks and other DC plans, one would utilize the same tables as in IRS Pub. 590 for IRAs it is my understanding)?

2. In light of the recent Supreme Court Ruling that Inherited IRA’s for non-spouses are not protected from creditors, since it’s unclear whether or not there would be creditor protection for spouses does it make sense to have the spouse be the primary beneficiary, with a trust for the spouse the secondary beneficiary – enabling the spouse to disclaim if it makes sense to do so at that time given the status of laws and circumstances?

Thank you.

Jason



Submitted by Alan - IRA critic on Fri, 2014-09-26 18:48

  1.  Yes, the Pub 590 tables also apply to RMDs from qualified plans. RMDs are not required by the IRS for employees still working and beyond 70.5 unless 5% or greater owner of the co. However, some plans may still require that RMDs begin for ALL employees at 70.5, and this is permitted by the IRS.
  2. That should not be necessary except in states that limit IRA protection for owners, and thereby for surviving spouse’s doing a rollover. Surviving spouses still have creditor protection in states where the IRA owner has protection. And some states have passed their own laws to protect inherited IRAs for non spouse beneficiaries as well.


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