leaving 401(k) to son in a BY-PASS trust | Ed Slott and Company, LLC

leaving 401(k) to son in a BY-PASS trust

I am trying to understand the operational side of this strategy upon the father's death. This is my understanding; upon father's death, the 401(k) would have to be rolled over into an inherited IRA. The inherited IRA would have to begin making MRD no later than 12/31 of the year following the year of father's death. The MRD would pay out of the inherited IRA account TO the opened By-Pass trust account. (Are taxes paid at trust rates by the Trust or individual rates?) It should be understood that the wife is still alive and doing well. It is my understanding that the wife has to die before the By-Pass assets can be invaded (received) by the son. So, over time, the By-Pass trust account is simply accumulating the MRD's? until the time that the wife dies? At that time, the Trustee, per Trust provisions can pay out whatever dollars are left in Inherited IRA account and By-Pass trust account to the beneficiary. In the meantime, income taxes are paid on appreciation in trust account at trust rates by beneficiary. What is the tax treatment upon later distribution? What points am I right about and what points am I wrong about?

Find members of Ed Slott's Elite IRA Advisor GroupSM in your area.
We neither keep nor share your information entered on this form.

I agree to the terms and services:

You may review the terms and conditions here.