IRA trust
If there are sub-trusts added to the see through trust, then the designated beneficiary of each sub trust may take RMD’s based on their on age, correct? Thank you
If there are sub-trusts added to the see through trust, then the designated beneficiary of each sub trust may take RMD’s based on their on age, correct? Thank you
Permalink Submitted by mk foss on Fri, 2010-10-01 00:31
The current rule is that if there is one trust at the IRA owner’s date of death, the age of the oldest beneficiary is used for determining RMDs even if the trust is immediately divided into subtrusts. In order to allow each trust beneficiary to use their own life expectancy, the subtrust would need to be named as beneficiary. Such as: 1/3 to Trust A, subtrust of S family trust; 1/3 to Trust B, subtrust of S family trust; 1/3 to Trust C, subtrust of S family trust.
Another way to do it would be to divide the IRA before death and name one subtrust as the beneficiary of each divided IRA.
Permalink Submitted by Bruce Steiner on Sun, 2010-10-03 06:05
Even if each separate trust is the beneficiary of a portion of the IRA, if upon the death of a beneficiary, the balance of his/her trust might go to the others (for example, if the beneficiaries are the IRA owner’s children, and a child dies without leaving any issue, and the balance of his/her trust is added to the other children’s trusts), each trust would use the oldest child’s life expectancy.
For more on this, see my article on trusts as beneficiaries of retirement benefits, in the March 2004 issue of BNA Tax Management’s Estates, Gifts & Trusts Journal: http://www.kkwc.com/docs/AR20041209132954.pdf.