Major financial institution calculates grantor’s RMD using joint life table where spouse is (1) 10+ years younger and (2) is beneficiary of conduit trust requiring all income to be distributed to spouse upon grantor’s death. Is financial institution’s calculation correct?
IRS reg 1.401 appears to apply to 401K Pensions. Do these reg’s also apply to an IRA so as to allow use if the joint table for grantor?
The RMD Regs are stated in Sec 401(a)(9). IRAs follow those Regs except in the few cases where IRAs are unique, such as assuming ownership by a surviving spouse, and RMD aggregation rules. The few such exceptions are stated in Reg 1.408-8, which also clarifies that IRAs follow the qualified plan rules except where specifically stated.
One more question please: Q-6 (a) of above regulation deals with distributions before death and states spouse will be considered beneficiary under the Trust if “..spouse is ths sole beneficiary…”. The Trust in question names spouse as primary beneficiary during her life, all earnings must be distributed to spouse, and Trustee may disburse all capital of the Trust for spouse’s lifetime needs. However, Trust has two remainder beneficiaries after spouse’s death to whom any remaining balance will be distributed per stirpes.I assume your prior answer re use of the joint Table would still apply since A-5 contemplates more than one beneficiary. Correct?
I think you’re conflating marital and conduit trusts. To qualify for QTIP, the spouse must be entitled to all of the income from both the trust and the IRA. However, to qualify as a conduit trust, the spouse must be entitled to all of the amounts distributed from the IRA on a current basis, even if the distributions are more than the income.
Bruce Steiner
If it’s a QTIP trust, then the spouse cannot be considered a sole beneficiary, and the Uniform Table would apply instead of the joint table.
Permalink Submitted by Alan - IRA critic on Sat, 2021-08-21 23:11
Yes. Per IRS Reg 1.401(a)(9)-4, QA 5 and 6, if the IRA owner provides trust information to the custodian, and because the trust is a conduit trust, the conduit beneficiary (spouse) is treated as the sole (spousal) beneficiary of the IRA. Accordingly, the joint life table is applicable as long as the marriage continues, and the spouse is > 10 years younger than owner.