Making a private family foundation an IRA beneficiary

Submitted by Michael Philipps on Thu, 2023-09-28 11:57

Is there any reason why a private family foundation cannot be named a primary IRA beneficiary whose purpose would be to avoid the 10-year payout rule while at the same time continuing to manage the original IRA assets (stocks, bonds, and cash) to be used for supporting other family members and charities following the death of the IRA owner?



Submitted by Alan - IRA critic on Thu, 2023-09-28 15:14

  • Most family members are “disqualified persons” and cannot receive any benefit from the foundation. Such foundations are basically for charitable purposes. Or are you proposing to leave an IRA to a foundation and have another IRA left to family members directly?
  • A family foundation is an allowed IRA beneficiary but would be treated like a non qualified trust which results in the 5 year rule if the IRA owner passed prior to RBD, and the remaining LE of owner if they pass post RBD. If the owner passes later than age 80, the distribution period is under 10 years, but it would not matter much since distributions to the foundation would be non taxable. 
  • Good Governance: Basic Rules For Governing A Family Foundation – NCFP

 



Submitted by Michael Philipps on Thu, 2023-09-28 17:02

Thank you.



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