RMD when beneficiaries of an IRA are an individual and a see-through-trust with more than one individual beneficiaries
I have an IRA and I am receiving RMDs. The beneficiaries of my IRA are a son and a see-through-trust with my grandchildren as the beneficaries of the trust. I plan to leave my IRA to a son and a see-through-trust for more than one grandchildren. I understand that my son and as well as the trust will be subject to RMDs. The trust will be Conduit trust and pass on the RMDs to the beneficiaries of the trust as received.
I have two questions. Can the funds in the trust stay in one pot rather than split between individual beneficaries accounts? Can the trustee be empowered to make distribution to an individual beneficiary in addition to his RMD share, in case of the genuine needs?
Permalink Submitted by Alan - IRA critic on Tue, 2024-11-19 22:36
The trust funds can remain in a single pot, and the trust will remain a conduit trust as long as all IRA distributions are passed through annually to the trust beneficiaries. Being that there are multiple conduit beneficiaries, the annual RMDs will be based on the oldest conduit beneficiary and the 10 year rule will apply as well.
If for any reason the trust does not qualify for see through status, then the RMDs will be based on your remaining single life expectancy with no 10 year rule. That will probably increase the annual RMDs, and the IRA would last longer than 10 years if you passed prior to age 81, or less than 10 years if you passed after 81.
Also, your son needs to create a separate inherited IRA by 12/31 of the year after the year you pass, so that his RMDs will not affect the trust RMDs as his older age would then be applied to the annual trust RMD calculation.