Trust benificiary

Submitted by Thomas Wilding on Thu, 2013-03-28 17:45

I attended your workshop in Las Vegas in sept of last year. Recently one of my clients inherited a trust acct and an ira from her father. Her fathers accts have been managed by the Huntington bank trust dept. In 2010 they changed the benificiaries to his trust because his wife was do to he and mental decline unable to sign checks etc. he pssed away on 12/03/2010 the beni’s of the trust where his wife and two children a son who waqs disabled and thier daughter(my client). The brother passed away on 10/10/2012 and the wife passed away on 01/17/2013. They have been calculating the based on jt table. her fathers b-date is 04/19/1926 her mother b-date is 08/06/1926. so in 2013 the bank has said the factor is 13.4 and for 2014 12.7.
If I understand the law correctly once they put the beni as the trust they should have paid out based on the single life expectancy table not jt and they woulf use the age ogf the oldest beni of the trust which would have been the father.
So my qwestions are these
1- shouldn’t they have been paying out since 2010 based on single table or does that start at his death?
2- Now the bank was going to just pay out the non IRA trust(which was the benificiary) to daughter, does the trust need to be keep to have the RMD’s paid through?
3-It is my understanding that there is no way to pay out based on my clients(the daughter) age 56.
It appears to me that the ban has made a major mistake that cannot be fixed and probaly needs to be corrected for the past two years. If it is at all possible I would like to talk with someone to make sure I can explain this and make sure it is handled correctly correcting the problem and moving ahead correctly. I really need information on this as soon as possible. and then I also would like information on the elite group program.



Submitted by Thomas Wilding on Thu, 2013-03-28 17:51

Sorry for the spelling I was in hurry and didn’t check beore I sent it.

Submitted by Alan - IRA critic on Thu, 2013-03-28 22:23

  • 1) Yes, the RMD starting in 2011 should be calculated using the single life table and the age of the oldest trust beneficiary, which was the wife, who would have been 85 as of 12/31/2011. The divisor is 7.6. It so happens that the RMDs are the same here whether the trust is qualified or not, since oldest beneficiary was same age as owner.
  • 2) The RMDs must continue to be paid to the trust until the trust provisions allow the trustee to terminate the trust and assign the IRA to the daughter.
  • 3) You are correct. The initial divisor of 7.6 for 2011 is reduced by 1.0 each year thereafter, ie to 6.6 for 2012 and 5.6 for 2013. The 2010 RMD was the amount of the father’s RMD using the Uniform Table.
  • The bank has paid insufficient RMDs for 2011 and 2012. The correct RMD needs to be determined and the shortfall for each year distributed ASAP. Then Form 5329 needs to be filed by the trust to request the waiver of the 50% accumulation penalty for “reasonable cause”. If the trust has been passing through the RMDs to the daughter, she will end up with the shortfall for 2011 and 2012 plus the 2013 RMD taxable in 2013. Hopefully, the IRS will waive the penalty based on the cause being depending on the bank for RMD calculation.
  • Suggest you call Ed’s office (# available on this site) for Elite group information.

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