IRA to IRA Trust BDA to 4 BDA IRAs

Submitted by Steven A Henderson on Wed, 2018-05-09 19:57

I have a client that passed away in January of this year. He was 81 years old and had an RMD amount of $9,651.96 or witch he took out $1,650 ($8,001.96 remaining). The beneficiary of the IRA was a trust. The beneficiary of the Trust is his 4 children, split equally. I am trying to figure out how the RMD should be calculated this year and moving forward. Two of the beneficiaries want to cash out and the other two do not. So, my questions are:
1. Can the RMD be past though to the 4 IRA BDA’s that I am going to have to set up or does it have to come out of the trust account before I split the account in to 4?
2. If, I can split the RMD amount to the 4 IRA BDAs. Now, do the two kids cashing out satisfy the RMD for the year or does each kid need to take out 25% of the remaining RMD amount?
3. When calculating the RMD amount for next year, can we use their own birthdays or do I have to use the oldest child’s birthday?



Submitted by Alan - IRA critic on Wed, 2018-05-09 20:23

  1. Do the trust provisions allow the IRA to be assigned out of the trust to the trust beneficiaries?  If so, it brings into question what the intent of naming the trust as beneficiary was. Assuming the IRA can be assigned by the trustee of the trust, the RMD can be delayed and taken in any proportion by the 4 children. Since 2 want to cash out, the other 2 would not have to take any of the remaining year of death RMD amount.
  2. See above. The cashout beneficiaries will complete the year of death RMD.
  3. For 2019 and beyond, the beneficiary RMDs must all be based on the oldest child, since the separate account rules do not apply to trust beneficiaries even after they have been assigned their own inherited IRAs.

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