Can a trustee decline to be treated as a qualified trust?

Submitted by Robert Vashko on Tue, 2022-08-16 14:12

Suppose IRA Owner dies at age 74, after RBD. IRA is left to a trust that *could* be deemed a qualified trust.

Now suppose that none of the trust beneficiaries are EDBs. Under SECURE and the proposed regs, that trust would have RMDs for years 1-9 based on oldest trust bene, and then must empty completely in Year 10.

Suppose the trustee wanted a longer payout period. If the trust was not deemed a qualified trust, then the payout option is ALAR based on the deceased owner’s Table III schedule, right?

That might not be a huge extension beyond the 10-year window, but it’s something. If the trustee declined to provide sufficient paperwork to the custodian whereby the trust failed one of the requirements to be deemed “qualified”, could this work?

I recognize that there will be variations in position and policy from custodian to custodian, but from the perspective of the Service, is there anything preventing this?

Flag as spam

Permalink Submitted by Alan - IRA critic on Tue, 2022-08-16 14:39

Have not heard of any guidance on this, but it should work. Failure to submit the trust info to the custodian is a clear requirement for qualification and it is not possible to determine if lack of submission is intentional or not. Note that if not qualified, the decedent’s remaining LE in Table I (single life) is used for annual RMDs.

Permalink Submitted by David Mertz on Tue, 2022-08-16 16:06

I’m sure I’ve seen intentional disqualification of look-though for this purpose being discussed somewhere, but I don’t remember where. (Not any IRS guidance.)
The youngest possible age in the year of death for someone dying after their RBD is 73 which has a Table I life expectancy of 16.4 years, resulting in a maximum stretch of 16 years following the year of death. (The first beneficiary RMD will use a divisor of 15.4.)