can a trust be a designated beneficiary

Submitted by Richard Anderson on Wed, 2017-04-26 20:49

On page 37 of Ed Slott Retirement Road Map 2016, note the following statement, “If a non-person inherits your IRA, such as an estate, a trust or a charity, they cannot use a life expectancy to stretch post-death distributions….

Would it not be appropriate to qualify this with a statement such as “unless the trust is a see-through conduit IRA trust.” ?

Please reply.

Thank you.
RD Anderson, Charlotte, NC

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Permalink Submitted by Alan - IRA critic on Wed, 2017-04-26 23:57

Yes, since most trusts are qualified for look through treatment, this should have mentioned such trusts, in which the age of the oldest trust beneficiary is used for RMDs paid to the trust. The trust does not need to have conduit limitations to be qualified, but a conduit trust might be useful to avoid having an older contingent beneficiary’s age having to be used for RMD calculation.

Permalink Submitted by Bruce Steiner on Thu, 2017-04-27 03:19

No. Conduit trusts rarely make sense. If the beneficiary lives to life expectancy, which is what you would expect, nothing will be left in the trust. All of the assets will be thrown into the beneficiary’s estate and exposed to the beneficiary’s creditors and spouses.

See my article on this subject in the March 2004 issue of BNA Tax Management’s Estates, Gifts & Trusts Journal: http://www.elderlawanswers.com/Documents/Trusts%20as%20Beneficiaries%20of%20Retirement%20Benefits.pdf .