Inherited IRA Question
Hello,
I have an IRA question regarding an inherited IRA with QTIP Trust as beneficiary. Per the QTIP trust document, the QTIP terminates upon death of surviving spouse (DOD in 2024), and 1/5 stays in trust and funds an FBO trust. Then, 1/5 goes to four individuals free of trust.
How would the RMD be computed? For the shares that are free of trust, could it be possible to setup inherited IRAs for each individual and have an inherited IRA for the FBO Trust?
Thanks,
Permalink Submitted by Alan - IRA critic on Wed, 2025-10-01 15:32
If this is a valid conduit trust, the RMDs are based on the single LE of the surviving spouse each year. Upon death of the surviving spouse the RMD divisors continue but with an annual 1.0 divisor reduction, and the 10 year rule kicks in at that time.
If the IRA custodian will cooperate with an assignment from the trustee of the trust to distribute the inherited IRA out of the trust to the trust beneficiaries, this will provide those beneficiaries with their own inherited IRAs to manage, but this does not affect the RMD divisors indicated above or the 10 year rule.