beneficiary ira trust wants to look through and pass assets
What IRS letter rulings allow for a Beneficiary IRA own by a Trust to divide assets to individual beneficiary IRA’s?
What IRS letter rulings allow for a Beneficiary IRA own by a Trust to divide assets to individual beneficiary IRA’s?
Permalink Submitted by Alan Spross on Mon, 2009-02-02 22:39
The trust provisions determine whether separate accounts can be created or not. However, even if the trust permits their creation or terminates, these beneficiaries cannot use their individual life expectancies for determining RMDs per the following copy of IRS Reg 1.401a(9-4). The separate account rules to not apply to trust beneficiaries:
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Q–5. If a trust is named as a beneficiary of an employee, will the beneficiaries of the trust with respect to the trust’s interest in the employee’s benefit be treated as having been designated as beneficiaries of the employee under the plan for purposes of determining the distribution period under section 401(a)(9)?
A–5. (a) If the requirements of paragraph (b) of this A–5 are met with respect to a trust that is named as the beneficiary of an employee under the plan, the beneficiaries of the trust (and not the trust itself) will be treated as having been designated as beneficiaries of the employee under the plan for purposes of determining the distribution period under section 401(a)(9).
(b) The requirements of this paragraph (b) are met if, during any period during which required minimum distributions are being determined by treating the beneficiaries of the trust as designated beneficiaries of the employee, the following requirements are met—
(1) The trust is a valid trust under state law, or would be but for the fact that there is no corpus.
(2) The trust is irrevocable or will, by its terms, become irrevocable upon the death of the employee.
(3) The beneficiaries of the trust who are beneficiaries with respect to the trust’s interest in the employee’s benefit are identifiable within the meaning of A–1 of this section from the trust instrument.
(4) The documentation described in A–6 of this section has been provided to the plan administrator.
(c) In the case of payments to a trust having more than one beneficiary, see A–7 of §1.401(a)(9)–5 for the rules for determining the designated beneficiary whose life expectancy will be used to determine the distribution period and A–3 of this section for the rules that apply if a person other than an individual is designated as a beneficiary of an employee’s benefit. However, the separate account rules under A–2 of §1.401(a)(9)–8 are not available to beneficiaries of a trust with respect to the trust’s interest in the employee’s benefit.
(d) If the beneficiary of the trust named as beneficiary of the employee’s interest is another trust, the beneficiaries of the other trust will be treated as being designated as beneficiaries of the first trust, and thus, having been designated by the employee under the plan for purposes of determining the distribution period under section 401(a)(9)(A)(ii), provided that the requirements of paragraph (b) of this A–5 are satisfied with respect to such other trust in addition to the trust named as beneficiary.
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