WHEN ESTATE OR TRUST IS THE BENE TO AN IRA
There are several beneficiaries to a trust that want to have the funds in the deceased IRA put into their IRA and then they do payout life time. if they are non spouse what are their options?
There are several beneficiaries to a trust that want to have the funds in the deceased IRA put into their IRA and then they do payout life time. if they are non spouse what are their options?
Permalink Submitted by Alan Spross on Tue, 2010-07-06 22:55
Their options depend on the terms of the trust:
1) Whether the trust is qualified for look through treatment (most are)
2) Whether the trust can be terminated and/or can distribute IRA distributions to the trust beneficiaries
If a trust that is qualified (1 above) cannot be terminated under it’s terms by the deadline to create separate accounts, then the IRA RMDs are based on the oldest trust beneficiary.
An estate beneficiary can never qualify for look through treatment. Therefore, the 5 year rule applies if the IRA owner passed prior to their RBD. If the owner passed on or after the RBD, RMDs can be based on the remaining non recalculated life expectancy of the deceased owner. The estate executor can have the IRA assigned directly to the estate beneficiaries, but the RMDs are still determined by the previous two sentences.