Trust as Beneficiary for IRA over age 72

Submitted by Jerod Wurm on Fri, 2020-02-28 17:26

IRA owner is older then 72.
Beneficiary on his IRA is his Trust
His 3 Adult children are beneficiaries of his Trust

Any issues here?
Is it better to name the adult children specifically as beneficiaries? If so, why?



Submitted by Alan - IRA critic on Fri, 2020-02-28 20:09

It depends on the purpose for the trust. Will IRA distributions be accumulated in the trust for creditor protection? If no beneficiary is disabled or chronically ill upon death of the IRA owner, they will all be subject to the 10 year rule whether a trust beneficiary or the IRA is left outright. The exception is when the trust is not qualified and in that case the IRA would be distributed over the remaining life expectancy of the decedent. That period could be more or less than 10 years in length.

Submitted by Bruce Steiner on Sat, 2020-02-29 03:28

  • What is “his trust?”  He’ll be dead so he can’t be a beneficiary of a trust.
  • Our clients generally provide for their children in trust rather than outright.  That keeps their children’s inheritances out of their estates for estate tax purposes, and protects their inheritances from their creditors and spouses, and Medicaid.  The same reasons for leaving other assets in trust apply to retirement benefits.
  • So he should consider naming trusts for his children as the beneficiaries of his IRA (on the beneficiary designation form, or on a rider attached to it.
  • Bruce Steiner

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