RMD Calculation – Trust as Bene – Account Holder Living

Submitted by J Futch on Mon, 2014-06-16 13:24

Good morning. I have a scenario that I’ve never come across before so would like to get thoughts on this.

John is 86 years old, has a traditional IRA and is alive.
The bene of John’s IRA is his revocable living trust.
John’s wife, Mary, is >10 years younger than John.

John wants to calculate his annual RMD using Table II – Joint Life and Last Survivor Expectancy – on the basis that Mary is the beneficiary of the trust.

I’m told the trust qualifies for look through (I have not seen the trust); however, I’m also told Mary is the been of the QTIP share and she is not the trustee.

Is it possible to Table II in this scenario?



Submitted by Bruce Steiner on Mon, 2014-06-16 14:56

More important is the effect on the distributions after his death.  See my article on this in the March 2004 issue of BNA Tax Management’s Estates, Gifts & Trusts Journal:  http://www.kkwc.com/docs/AR20041209132954.pdf

Submitted by Irene Feeley on Wed, 2014-06-18 17:30

client died and his wife is the beneficiary of his ira. Can she roll it into her own ira or must she open a spousal beneficiary ira?

Submitted by Alan - IRA critic on Wed, 2014-06-18 18:01

She can maintain the IRA as beneficiary OR roll it over to her own IRA anytime she wishes. If she is under 59.5, she would probably maintain the IRA as beneficiary so her distributions would not be subject to the 10% penalty, and then roll it over. Or if client was not yet taking RMDs, she could keep it as inherited without any RMD until he would have reached 70.5. But in all other cases, she would be better of rolling it over to her own IRA. She will have to present a death cert and other paperwork to establish that client died before she can make any changes, so custodian will probably make it an inherited IRA first. She can then either continue it, transfer it elsewhere or take a full or partial distribution and roll it over to her name within 60 days.

Add new comment

Log in or register to post comments