SECURE act — Age of trust beneficiaries?
Prior to the SECURE act when a trust was named as the beneficiary of an IRA it was important to consider who was the oldest trust beneficiary because this would limit the withdrawal plan from the IRA. Am I correct now with the 10 year rule there is no need to consider the age of any of the beneficiaries? Thus, a very old beneficiary can benefit from the 10 year rule.
2nd question, has the IRS clarified if withdrawals must be taken in year one through nine or can one wait until year 10 to withdraw the lump sum?
Permalink Submitted by Alan - IRA critic on Thu, 2021-08-19 21:48
Generally you are correct about Secure making the age of trust beneficiaries less critical, but each situation requires consideration of when owner passed relative to RBD, whether trust is qualified or not, and whether the trust is a conduit or discretionery trust.
For the 10 year rule, the IRS has corrected an earlier error in Pub 590, and clarified that no annual RMDs are required under the 10 year rule – just that the account must be distributed by the end of year 10.