Trust as Beneficiary of an IRA account
What are the downsides of having a trust as a beneficiary of an IRA account as opposed to naming adult child?
What are the downsides of having a trust as a beneficiary of an IRA account as opposed to naming adult child?
Permalink Submitted by Alan - IRA critic on Wed, 2024-08-07 13:53
Drafting costs of the trust, trust must file a 1041 for each year that it receives distributions, if distributions are held in the trust (accumulation trust) the tax rate will be higher than that of the beneficiary. And if the trust is not qualified for look through and IRA owner passes prior to RBD, the IRA will have to be distributed within 5 years to the trust.
A responsible trustee for the trust needs to be selected.