See-through trust with a non-natural trust beneficary

Submitted by Robert Vashko on Thu, 2019-08-22 19:36

I know the general rule that in order to stretch via a see-through trust, all the trust beneficiaries must be designated beneficiaries (natural, living breathing people). If a charity is named as beneficiary, even if there are other natural beneficiaries, the stretch is generally not available.

However, does it make a difference if the IRA owner already hit their RBD and was taking RMDs? Would the trust at least be able to continue taking RMDs based on the owner’s schedule? Can’t recall ever having a case like this before.

Please and thank you.



Submitted by Alan - IRA critic on Thu, 2019-08-22 20:59

Yes, the trust could take RMDs using the remaining life expectancy of the decedent. However, the trust could still be qualified if the charities were paid off by the beneficiary determination date (9/30 of the year following year of owner’s death) leaving only individual beneficiaries with a life expectancy.

Submitted by Robert Vashko on Fri, 2019-08-23 03:12

Thanks much.  I thought that sounded right. Do you have citing authority on that?  I can dig for it myself, but if you had the relevant code section or treasury reg, I’d be most grateful.

Submitted by Alan - IRA critic on Fri, 2019-08-23 03:48

  • Re LE of the decedent applying for death after RBD  – IRS Reg 1.401(a)(9)-5. QA 5.
  • Re Trust beneficiary determination date – IRS Reg 1.401(a)(9)- 4 QA 4 and QA 5.

Submitted by Bruce Steiner on Sat, 2019-08-24 11:17

  • “Paying off” the charity by September 30th of the following year has no practical significance.  If you wanted the charity to receive a portion of the IRA upon the IRA owner’s death, you would simply name the charity (on the beneficiary designation form) to receive a portion of the IRA, and name trusts for the individual beneficaires (on the beneficiary designation form) to receive the rest of the IRA.
  • Bruce Steiner

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