Trust as a beneficiary
Good Afernoon,
I am looking for guidance on the following situation:
Account owner passed away leaving his IRA to a trust (20%) and multiple designated beneficiaries (20% each to four kids)
Trust qualifies as a look-through.
account owner reached his RBD at the time of death
Questions
1. Can the designated beneficiaries (not the trust beneficiaries) split into muliple inherited IRAs (by 12/31/12) and use their own life excpectancy.
2. Do the trust beneficiaries (assuming all are designated beneficiaries) have the ability to split into seprate inherited IRA and use their own life expectancy? My understanding is this is not permitted; the life expectancy of the old beneficiary must be used (even if the accounts are split)
Thank you!
Permalink Submitted by Alan Spross on Tue, 2012-01-31 17:55
1) Yes, they can (and should).
2) You are correct. If the trust is allowed to terminate, the IRA share can be split into inherited IRAs for each trust beneficiary, but this will NOT change the RMD requirements as a result of the trust being listed as beneficiary. What this means is that the oldest beneficiary of the trust will continue to determine the RMD divisors for all of the trust beneficiaries. But if the oldest trust beneficiary were older than the decedent, the decedent’s remaining life expectancy would apply instead since death was after the RBD.