Trust pays out RMD to Benificiary

Submitted by Peter Weisberg on Tue, 2016-01-26 00:55

A trust is the beneficiary of an IRA. Can the trust take the RMD that has to be paid out
to the trusts beneficiary and pass it through to the beneficiary via a K-1 to avoid the Trust
having to pay higher taxes on the RMD. If so, where on the K-1 would it appear. And would the
trust have to issue a 1099R to the beneficiary?



Submitted by Alan - IRA critic on Tue, 2016-01-26 01:59

Box 5 of the K 1 for the taxable portion. If the IRA distribution is partly non taxable, Form 8606 should be included to provide the breakdown of the taxable and non taxable amounts. The trustee does not have to issue a 1099R to the beneficiary.

Submitted by Bruce Steiner on Tue, 2016-01-26 04:15

  • What does the Will or trust agreement say?

 

  • Assuming the Will or trust agreement permits the distribution, there’s a tradeoff.  The distribution may save income taxes, but will throw the amount distributed into the recipeint’s estate for estate tax purposes, and will expose it to the recipient’s creditors and spouses.  

 

  • Bruce Steiner, attorney, NYC, also admitted in NJ and FL

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