Permalink Submitted by Alan - IRA critic on Tue, 2015-05-19 20:02
You are referring to naming the RLT as the IRA beneficiary. The RLT will become irrevocable upon the owner’s death. If the trust is qualified for look through treatment, then the RMDs will be based on the age of the oldest trust beneficiary including remainder beneficiaries. The trust can provide creditor protection for the beneficiary including spouses or can control distributions to the beneficiary for those who cannot manage the money, but if the trust is not qualified or the trustee misses the critical notification deadline, then the stretch for the trust beneficiaries will be impaired.
Permalink Submitted by Bruce Steiner on Wed, 2015-05-20 15:01
It doesn’t often make sense to name a revocable trust as beneficiary of an IRA. First, while revocable trusts make sense in some cases, and in some states, they’re overhyped and oversold, and for most people, in most states, are not necessary, and tend to distract people from more important issues. Second, even if you create a revocable trust, it usually makes more sense to leave the IRA to the spouse, or to or in trust for the children or other beneficiaries.
Permalink Submitted by Alan - IRA critic on Tue, 2015-05-19 20:02
You are referring to naming the RLT as the IRA beneficiary. The RLT will become irrevocable upon the owner’s death. If the trust is qualified for look through treatment, then the RMDs will be based on the age of the oldest trust beneficiary including remainder beneficiaries. The trust can provide creditor protection for the beneficiary including spouses or can control distributions to the beneficiary for those who cannot manage the money, but if the trust is not qualified or the trustee misses the critical notification deadline, then the stretch for the trust beneficiaries will be impaired.
Permalink Submitted by Bruce Steiner on Wed, 2015-05-20 15:01
It doesn’t often make sense to name a revocable trust as beneficiary of an IRA. First, while revocable trusts make sense in some cases, and in some states, they’re overhyped and oversold, and for most people, in most states, are not necessary, and tend to distract people from more important issues. Second, even if you create a revocable trust, it usually makes more sense to leave the IRA to the spouse, or to or in trust for the children or other beneficiaries.