Trust as Successor Beneficiary

Submitted by Niki Sturm on Tue, 2023-12-12 19:20

When a revocable trust is named as the successor beneficiary of an inherited IRA, do we continue the same RMD rules/10 yr distribution as the original beneficiary? Any unique scenarios or situations I should be aware of? Thanks for your guidance!



Submitted by Alan - IRA critic on Tue, 2023-12-12 20:04

  • The RLT is not treated any differently than an individual successor beneficiary. The same variables apply, which are based on whether the IRA owner passed pre or post RBD, whether the designated beneficiary was a pre Secure beneficiary, post Secure 10 year rule, or post Secure EDB beneficiary. Any 5 or 10 year rules already in place for the designated beneficiary are never extended for successor beneficiaries, and the type of the successor beneficiary (qual trust, NQ trust, estate, or individual) does not affect the RMD requirements for the successor.
  • The proposed Secure Act Regs permit annual RMDs being taken by a DB to cease for the successor beneficiary  if the owner passed pre RBD. They must continue for the successor if the owner passed post RBD.

Submitted by Bruce Steiner on Sat, 2023-12-30 17:38

  • Since a revocable trust is merely an administrative trust which distributes its assets to its beneficiaries, it would usually make more sense to name the beneficiaries of the revocable trust, or trusts for their benefit, as the beneficiaries of the IRA, rather than the revocable trust itself.
  • The principal exception is where you have a formula provision that’s too complicated to put in the IRA beneficiary designation.
  • Bruce Steiner

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