SECURE Act
Prior to death and the SECURE Act, a decedent designated a conduit trust for her adult son as the beneficiary of her IRA. When the trust was prepared, the son was not disabled and, consequently, the trust agreement did not include typical “special needs” terms. Rather, the agreement directs the withdrawal and distribution of RMDs. Shortly prior to the mother’s death, the son qualified for SSI. Since the son is an EDB, are distributions based on son’s life expectancy or does the 10 year rule apply? Thanks you.
Permalink Submitted by Alan - IRA critic on Wed, 2021-01-20 14:48
SInce son is an EDB based on his condition on DOD, his RMDs will be based on his LE. A conduit trust is automatically treated as a look through trust, therefore there is no need to be sure that the trust meets all the other requirements of a look through trust. End result is the same as if the IRA was left to the son outright. Technically, on DOD the son may need to obtain a statement from his MD that he qualifies under Sec 72(m)(7) as disabled if there is any question about the SSI benefit being conclusive.
While the trust will get the stretch, the lack of SNT wording might result in the loss of SSI benefits. Check with local trust attorney on this issue.