If the beneficiaries of a multi-generation accumulating IRA Trust are “my issue living from time to time” qualify as “real living” persons that is “living breathing” persons? Thus, (even if not yet born) they are designated beneficiary and covered by the “All of the trust’s underlying beneficiaries must be identifiable as being eligible to be designated beneficiaries themselves.” IRS requirements
Under the Secure Act, a qualified accumulating trust will be subject to the 10 year rule, while for deaths after the RBD, the applicable IRA distribution period is the remaining LE of the decedent, and that phases down from 10 years at age 82 to 4 years at 95. (1)That is not as I understand the 10 year rule. (2) the IRS UNIFORM LIFETIME TABLE for 82 is 17.1. Am I using the wrong table? I am 82 and this is also the RMD that Fidelity uses????? Can you give me more information?
The SECURE Act makes no changes to the As Rapidly Rule found under IRC Section 401(a)(9)(B)(i)(II). However, it does say that Non-Eligible Designated Beneficiaries get the 10-Year Rule… without saying something like, “They get the 10-Year Rule or can opt to use the As Rapidly Rule” (or not). So the question is will the language in the OP qualify as “Non-Eligible Designated Beneficiary”
Sorry, I meant to specify that the decedent’s LE would apply to a non qualified trust for deaths after the RBD. I edited that portion of the prior post.
As for the divisors, I used the new tables going into effect in January. They slightly lower RMDs except for very advanced ages. A link to the new tables follows:
Federal Register :: Updated Life Expectancy and Distribution Period Tables Used for Purposes of Determining Minimum Required Distributions
As for the “the longer of” or “at least as rapidly” rule, that is preserved, but would not apply to qualified trusts since they will be subject to the 10 year rule (except for applicable multi beneficiary trusts for the disabled). And if also would not apply to non qualified trusts, which can only consider the age of the decedent, not the beneficiary. With respect to why such a trust might not be qualified when all beneficiaries are living persons, the requirement for a qualified trust also requires that all beneficiaries be “identifiable from the trust instrument”. It is not clear whether this means that the name of each living “issue” be discovered and named by the trustee by the 10/31 deadline, as those details are controlled by the IRA custodian per p 14 of Pub 590 B. Each custodian’s procedures may differ there, but if a question arises around how “issue” is defined by a particular state, the 10/31 deadline could be missed and then the trust would be non qualified. Again, either qualified or NQ, the “at least as rapidly” rule is not applicable to either of those situations
There have been private letter rulings to that effect beginning with PLR 200235038: https://www.irs.gov/pub/irs-wd/0235038.pdf .
Bruce Steiner
Permalink Submitted by Alan - IRA critic on Sat, 2021-09-18 23:24
I think this is problematic, and the beneficiary designation could end up in court due to lack of clarity. Determination time could eat up the 10-22 month period for submission of the trust to the IRA custodian and could even result in some custodians declining to accept a trust beneficiary with this degree of multi generation discovery to determine all the eligible beneficiaries. For example, what about step children, adopted children, or illegimate children? Under the Secure Act, a qualified accumulating trust will be subject to the 10 year rule, but if the trust is not qualified, for deaths after the RBD the applicable IRA distribution period is the remaining LE of the decedent, and that phases down from 10 years at age 82 to 4 years at 95. Therefore, qualification of the trust will only add a few years to the IRA distribution period.
What is the intent of the “living from time to time” statement? It seems redundant.