look through trust
IRA trust qualifies as a look through but one of the underlying beneficiaries is a charity –
Is the “stretch” permitted using the life-expectancy of the oldest beneficiary (i.e. individual) assuming the charity is “cashed out” on or before September 30 of the year following death? Or is the “stretch” automatically lost due to the charity be named beneficiary of the trust? I’ve read Ed’s and Natalie Choate’s material – the answers seem to conflict
Thanks
Permalink Submitted by Ben Meyer on Thu, 2016-10-13 21:13
Can you list a specific reference or url for both articles or postings, for both Ed Slott article and Natalie Choate? It would be helpful to compare the exact way they phrased their respective views.
Permalink Submitted by Alan - IRA critic on Thu, 2016-10-13 23:01
It appears from Reg 1.401(a)(9)-4 Q 5 that if the charity is cashed out by the beneficiary determination date of 9/30, it is disregarded in the same manner as a charitable beneficiary of an IRA with no trust document. Further, in Q 6 it indicates that the beneficiaries as of 9/30 are to be submitted to the IRA custodian, with no mention of beneficiaries that no longer have an interest in the IRA. There is another month provided to actually submit this trust info to the custodian (10/31 deadline for submission). In these references there are cross referrals to other RMD Regs that seem consistent with this conclusion, even though there is no direct statement indicating that paid off beneficiaries are disregarded.
Permalink Submitted by Bruce Steiner on Fri, 2016-10-14 03:15
Cashing out a beneficiary of a trust can be complicated. What are the terms of the trust?
Permalink Submitted by Ben Meyer on Fri, 2016-10-14 15:56
Bruce, are there any specific trust terms you can describe that would facilitate cashing out a charitable beneficiary prior to the 9/30 date, in NY state, for example?
Permalink Submitted by Bruce Steiner on Fri, 2016-10-14 19:19