Stretch rules when a Trust is involved – post Secure Act
Husband’s IRA names a conduit trust as the primary beneficiary. This trust provides for care and the welfare of his disabled spouse during her remaining lifetime (language is clear that she is the sole income beneficiary until her death), with no distributions for anyone else until she passes. At that point, the trust will be split into multiple trusts for their 4 children. If the husband predeceases the wife, is she treated as an EDB (Eligible Designated Beneficary), with the right to stretch out the IRA distributions over her lifetime? Once she dies, would the children have a new 10 year withdrawal timeline?
Permalink Submitted by Alan - IRA critic on Thu, 2022-02-10 23:23
Yes, the conduit trust qualifies for look through, and because the income beneficiary is the spouse, the IRA is distributed under the rules for an EDB, the same as if the spouse inherited outright, but usually without the ability to do the spousal rollover. When surviving spouse passes in your example, the successor beneficiary children would result in the 10 year rule applying from there.