accumulation trusts under secure act 2.0

Submitted by marvin egorin on Mon, 2023-05-22 14:49

I have a past client who has called me who has asked me about the accusation trusts under the secure act 2.0. He has an IRA traditional and roth accounts.Does he have to take distributions annually from both accounts can he leave the money in the Beneficiary IRA’s until the 10th year and empty the accounts out in the 10th year.

thx
Marvin Egorin



Submitted by Alan - IRA critic on Mon, 2023-05-22 17:50

Assuming he is the non EDB beneficiary of a qualified (for see through) accumulation trust, generally he would not need to take annual distributions from the Roth IRA just drain it by year 10. However, the inherited traditional IRA would be subject to annual RMDs in years 1-9, but only if the owner passed after the RBD. If he is an EDB (eg disabled or not more than 10 years younger than the IRA owner) then annual RMDs would be required, but the 10 year rule would not apply. There are several variables in plan here, such as when owner passed in relation to RBD, whether the trust is qualified, and whether trust includes other beneficiaries.

Submitted by marvin egorin on Tue, 2023-05-23 17:05

what is an EDB and RBD. the accounts are just a traditional  and roth that have in exitence for a long time. would your answer be the same or changeMarvin Egorin

Submitted by Alan - IRA critic on Tue, 2023-05-23 19:55

  • The same. RBD is the required beginning date for traditional IRA RMDs of the owner. That date is 4/1 of the year following the year the owner turned 73. If the IRA owner passes after that date, the beneficiary must take annual RMDs in years 1-9 and drain the inherited IRA in year 10. A Roth IRA has no RBD, so there are no annual RMDs, but the inherited Roth must be drained in year 10.
  • An EDB (eligible designated beneficiary) is not subject to the 10 year rule. EDBs are disabled, a spouse, a minor child, or someone not more than 10 years younger than the deceased owner. They can stretch RMDs over their remaining life expectancy as before the Secure Act.

Submitted by Laura Thomas on Thu, 2023-05-25 17:41

I have an EDB whose Trust is beneficiary of Traditional IRA. Said IRA will dump into EDB’s Special Needs Trust. EDB is not subject to the 10 year rule.  QUESTION: Is EDB required to take RMDs, like absolutely must?  Obviously, we won’t actually distribute the RMD bc it is an accumulation trust (and SNT). But primarily, must the EDB take the RMD? Thank you.

Submitted by Alan - IRA critic on Thu, 2023-05-25 19:44

Yes, the trust must receive the annual RMD required of the EDB trust beneficiary if the trust is qualified, barring the usually negative option that the trustee could opt out of EDB treatment and into the 10 year rule IF the owner passed prior to RBD. Note that the SNT should be named directly as beneficiary on the IRA prior to owner’s death.

Submitted by Blakely Edwards on Fri, 2023-11-10 00:25

Marvin Egorin is a disgraced former advisor who traded securities on deceased client’s accounts and lost his license for doing so. His question relates to his own assets he’s trying to shelter against claims. 

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