Secure Act 10 yr and disabled beneficiary

Submitted by Pat Chesp on Mon, 2021-03-22 14:06

If leaving a Rolled over ira to a trust (conduit) for a disabled beneficiary it is clear that the disabled beneficiary can receive rmd’s based on their personal life expectancy table.
Question : Can the same beneficiary (without penalty or trust tax consequences ) not take any RMD’s during the first 9 years and then begin taking them based on their then life expectancy table? I note that able bodied beneficiaries can wait till year 10 and then must take the total IRA acct balance as one RMD to avoid penalty
.
Thoughts?



Submitted by Alan - IRA critic on Mon, 2021-03-22 17:13

No, if the trust is qualified for look through, the annual RMDs based on the LE of the conduit beneficiary must be distributed. The 10 year rule is for non eligible individual beneficiaries.

Submitted by Pat Chesp on Sat, 2021-04-24 12:11

This is actual situation. If disabled beneficiary has started recieving RMD’s based on life table and then returns to work and is classified as not disabled (stops getting SSDI)  can they switch to the 10 yr rule (ie withdraw total amount within 10 years) 

Submitted by Alan - IRA critic on Sat, 2021-04-24 15:11

The Secure Act indicates that the determination of disability is made at the time of death of the plan owner and there is no mention of a change in status as would be the case of an eligible minor who reaches the age of majority. While the disabled beneficiary has until the end of the year following the year of death to opt out of LE RMDs and into the 10 year rule if owner passed prior to RBD, once that window closes there is no further option unless the IRS writes the Secure Regs to provide such an option. 
If owner passed prior to RBD and after 2019, the window should still be open for this beneficiary to opt into the 10 year rule per recent IRS Pub 590 B.

Submitted by Bruce Steiner on Sat, 2021-05-01 15:35

A trust for a disabled person need not be a conduit trust to qualify for the life expectancy stretch.  It would rarely make any sense to make it a conduit trust (nor would it likely have made sense before the SECURE Act).
Bruce Steiner

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