IRA to Family Trust Disbursement
My father has passed away and his IRA beneficiary is the family trust comprised of myself and five other siblings. He was 84 years old. Money is with Edward Jones and they say they won’t disperse six ways, only as a lump sum to the trust. That leaves no opportunity for IRA rollover for any of us, only a cash payment subject to tax….. Are there any other options?
Richard
Permalink Submitted by Alan Spross on Wed, 2007-11-28 03:30
Richard,
There certainly should be a better option. Even if the trust is not qualified for look through treatment (see Pub 590, p 38), the IRA should be able to be distributed over your father’s remaining life expectancy, although the distributions will have to be made to the trust and distributed according to the provisions contained in the trust.
Any RMD for his year of death also has to be distributed in that year, but starting in the year after death, the single life table allows the RMD to be distributed over 8 years. 8 years is much better than a lump sum.
However, if the trust IS qualified, and you need to determine that, the RMDs would be based on the oldest trust beneficiary. This would likely be a much longer period than 8 years. The trustee of the trust should try to access someone knowledgeable in these matter at Jones, and should also get a current copy of the IRA agreement to review.
Permalink Submitted by Al Fry on Wed, 2007-11-28 20:35
I work with Jones al the time, and they normally allow stretches, even in trusts. I think what they meant was that they would not split the RMD 6 ways, since there is only one bene, the trust.
Permalink Submitted by Rose Kennedy on Thu, 2007-11-29 18:18
Somewhat related to the posted question, I have an IRA left to a trust that is a supplemental needs trust. The daughter in “need” is the beneficiary of the trust for her life. The three other children are beneficiaries after her death. The parent was over 70 1/2 at death. Are the ages of all 4 children considered when determining the “oldest” beneficiary for purposes of RMD?
Thank you for any comments.
Permalink Submitted by Bruce Steiner on Thu, 2007-11-29 22:41
Probably, but it depends upon the terms of the Will or trust agreement.