Calculating RMD of Trust IRA beneficiary
Decedent died at age 95 with a trust named as the IRA beneficiary. It is a conduit trust. The trust is written (prior to SECURE Act) so that the surviving spouse (second marriage) receives RMDs to support the wife during her lifetime. At her death, his children from his first marriage inherit what’s left.
How are RMDs calculated in this situation? Based on the decedent’s life expectancy (“ghost life expectancy”)? The wife’s as if it was a spousal rollover? The wife’s inherited IRA expectancy? 10-year rule?
Permalink Submitted by Alan - IRA critic on Mon, 2023-11-20 16:27
If the trust is qualified for look through, the RMDs will be based on the remaining recalculated LE of the surviving spouse using the single life table. Following the death of the surviving spouse, the 10 year rule will apply with annual RMDs in years 1-9 continuing using the schedule of the surviving spouse, but without recalculation. This means an annual 1.0 reduction of the divisor starts in the year after the death of the surviving spouse. If the trust is not qualified for some reason (eg trustee of the trust forgets to submit the trust details to the IRA custodian by the deadline), then the ghost LE of the decedent will apply which would be only 3-4 years.