proper wording for naming a Trust as bene of IRA/ 401(k)
what is the proper wording for the beneficiary designation naming a See-Through Trust as beneficiary of a) IRA and b) 401(k) FBO of three non-spouse (adult children) beneficiaries? Also to confirm my understanding, at time of death the named Trustee would set up three IRA Beneficiary accounts and then distribute from the respective decedent IRA and 401(k) assets to the newly set up three IRAs as per the Trust direction? What is the proper titling of these beneficiary IRAs? Lastly, for full understanding of the housekeeping, If the assets are then moved away from the original account/plan into the new Beneficiary IRAs how does the Trustee still control oversee the management and approved distributions from the IRA accounts?
Permalink Submitted by Bruce Steiner on Sun, 2015-11-22 01:00
Anything that will identify the three trusts in a way that will be clear to everyone. The lawyer will have his/her preferred way of drafting it. Just be careful to make sure that if a child predeceases, the share that would have been payable to the deceased child’s trust becomes payable to the trusts for the deceased child’s issue. The trustees of the trusts for the three children will then control the beneficiary IRAs.
Permalink Submitted by Thomas Horan on Tue, 2015-12-22 21:56
A trust Beneficiary of an inherited Beneficiary from a Deceased IRA missed taking the RMD for 2013 and 2014. In 2015 a catch-up distribution was made for three years. In 2015 the trust made a distribution to the children of the Decaised original IRA owner. The amount of the 2015 distribution was Equal to the 2013, 2014 and 2015 RMD distributions.If filing the 1041 for the trust (an initial return) for 2015 the three years of RMD will be included as income and then passed to the children as taxable income on thier Form K-1.When filling the form 5329 in asking for forgivness of the 50% penalty, how long will it take to know if the IRS forgives the penalty? We are talking about a $1,000 penalty and the Trust has no assets other than the future distribution of the remaining $5,000 inherred IRA. Is the Trustee safe in taking a 100% distribution from the remaining IRA in 2016 and closing the Trust in 2016? If not, who pays the penalty if the IRS later turns down the request for forgivness? How long does the Trustee have to wait to hear from the IRS? ThanksTH