Transfer benefits to older beneficiary prior to beneficiary finalization date
The following excerpt is from a form discussion in 2007. Has anything changed in the last 11 years?
Owner of 401k dies in 2006. Leaves all of 401k to trust. Beneficiaries are three kids. One kid is 40, the others 18 (twins). The 40 year old takes distribution of her full percentage prior to Sept. 30 2007, and rolls it into her own IRA, RMD is no longer based on 40 year old, correct? Basically, the trust beneficiary finalization date allows you to pick and choose trust beneficiaries even after death. Seems odd to me…is this correct? If so, how come everyone in this board always talks about RMDs having to be based on oldest beneficiary of trust? This is the “out”, no?
One answer:
The RMD [for the trust’s beneficiaries] would still be based on the 40 year old because separate account rules do not apply to trust beneficiaries. To eliminate the 40 year old from RMD calculation, that person would need to process a qualified disclaimer under Sec 2518, or (and this second option is less clear) perhaps take a full taxable distribution as might be expected for a charitable beneficiary…..
Does anyone disagree?
Permalink Submitted by Alan - IRA critic on Sat, 2018-03-17 01:19