Trust as a beneficiary of an IRA and Non-Qual Annuity
Hi – I understand in certain situations, in an IRA annuity account, if the trust is named as a beneficiary (non-natural person), depending on the trust structure and beneficiaries inside that trust, the distribution options are: lump sum, deplete over a 5 year term, or stretch option. However, if it is non qualified annuity account, the trust as beneficiary only has options as lump sum or 5 year term depletion. That’s if the custodian offers all options. Kindly, could you please verify? Thank you
Permalink Submitted by Alan - IRA critic on Fri, 2019-09-06 14:34
That is generally correct. The IRA custodian can always further restrict what the IRS permits, but for IRA accounts of all types this is relatively rare. NQ annuities are more affected by the insurance company provisions and/or possibly by state law. Therefore, the beneficiary will have to check specifically with their insuror to determine what the options are.