RMD for multiple beneficiaries to Rev. Trust
I know this is kindergarten level question for most of you. I will have a Rev. Trust receiving as beneficiary funds from an IRA. I understand distribution of stretch would be based on the eldest who is 62. There are three beneficiaries named in the trust for the
IRA proceeds. Does the trustee receive an amount based on one life, the eldest, and divide
it into three parts or an amount equal to three lives all based on that same age as the eldest?
Permalink Submitted by Alan - IRA critic on Wed, 2014-10-15 17:33
Yes, as long as the beneficiary shares are 1/3 each, each receives the same amount of the distributed RMD to the trust. But the amount distributed to the trust is based on the life expectancy of the oldest trust beneficiary.
Permalink Submitted by David Mertz on Wed, 2014-10-15 17:42
The RMD is the previous year’s year-end balance divided by the divisor based on the age of the oldest trust beneficiary. The number of beneficaries of the trust does not affect the amount of the RMD, it only affects how the RMD gets divided up.
Permalink Submitted by Rudy Zarling on Thu, 2014-10-16 13:43
I understand how the age is determined, but is the amount of the distribution for the eldest requested multiplied by three in this case? I can’t imagine the IRS allowing the one beneficiary amount be divided among three people.Second question, what if one of the beneficiaries wants more than the RMD?
Permalink Submitted by mk foss on Wed, 2014-10-15 20:51
The trust RMDs are based on the age of the oldest trust beneficiary in the year after the IRA owner dies. Once that factor is determined it is reduced by 1.0 each year and applied to the next year’s 12/31/13 value. The ages of the trust beneficiaries do not affect how much each of them gets, they’re only imported for determining where you start in the table for RMDs.
Permalink Submitted by Rudy Zarling on Thu, 2014-10-16 02:17
What if one of them wants more than the RMD
Permalink Submitted by Alan - IRA critic on Thu, 2014-10-16 19:06
If the trust provisions allow additional distributions to be taken from the IRA and distributed to a beneficiary, it can be done but then the trust will have to keep more detailed accounting records to recognize that the beneficiaries no longer have an equal remaining interest in the IRA.