RMD From an Inherited IRA Owned By a Trust (fictitious names)

Submitted by John Michael Hall on Fri, 2023-03-03 17:20

Jane passed away at age 50 in 2021. Her IRA was left to a trust for the benefit of Jane’s mother, Sally. Jane’s brother, John, is the trustee. There was no RMD taken in 2022.

My understanding is that the mother, Sally, can either take RMD’s based on her own age OR follow the 5 year rule. Is this correct?

If she can take RMD’s based on her own age/life expectancy, can we correct the fact that she didn’t take one in 2022? What is the process?

Thanks!!



Submitted by Alan - IRA critic on Fri, 2023-03-03 18:44

  • Is the trust qualified for look through, including the requirement that the trust beneficiary provisions had to be submitted to the IRA custodian by 10/31/2022?  If not done or trust is otherwise not qualified, the 5 year rule is mandatory, and the inherited IRA must be drained by 12/31/2026.
  • If the trust is qualified, if it is an accumulation trust the remainder beneficiaries will have to be taken into consideration, and often the 10 year rule will apply with no annual RMDs in this case. If a conduit trust, then mother can be treated as an EDB and stretch RMDs over her LE.

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