See Through Trust as IA beneficiary
I have a referral. His father passed after his RBD. A trust was set up as the beneficiary of the IRA. The beneficiaries of the trust are the decedent’s adult children. The trust qualifies as a see-through trust. First, under the final Secure 2.0 rules I want to confirm the 10 year distribution rules do apply to see-through trusts. Second, my referral did some on line research and says he can roll the trust held IRA to “non-qualified” IRAs for the beneficiaries. This will some how circumvent the 10 year rule and allow for distributions to be taken over the beneficiaries life expectancies. I’m not sure what he is talking about. Is this something that can be facilitated?
Permalink Submitted by Alan - IRA critic on Tue, 2024-08-13 13:00
No. While the provisions of the trust may allow the trustee to distribute the inherited IRA portions out of the trust to the individual trust beneficiaries, this will not change the beneficiary RMDs. The 10 year rule will apply (assuming no disabled beneficiary), with annual RMDs due in years 1-9 based on the age of the oldest countable trust beneficiary since the separate account rules do not apply to trust beneficiaries.
This assumes that the IRA custodian will accept the assignment request from the trustee. Some custodians do not cooperate.
Of course, assignment out of the trust may defeat the intended purpose of naming a trust as the IRA beneficiary and if this occurs the IRA owner should have just left the IRA to the beneficiaries outright.