Trust as IRA Beneficiary
Good Morning,
Is there specific language in a trust that allows an individual to have said trust as beneficiary of an IRA, without causing taxation at death, and allowing the individual to utilize the natural stretch provisions in an IRA?
Thanks in advance,
Kevin
Permalink Submitted by Edward Czapor on Fri, 2009-12-11 16:54
The trust must be a see through trust so that the beneficiaries will be treated as having been designated. The rules for this are are spelled out on pg. 39 of Pub. 590 under Trust as beneficiary. If there are several beneficiaries, then the age of the oldest must be used to calculate RMD’s for all.
Permalink Submitted by Kevin DeNardo on Fri, 2009-12-11 18:32
Thank you,
I guess I am looking for exact language or phrasing that would safeguard against taxation and the guarantee the ability to stretch.
Is this best worked out through a lawyer?
regards,
K
Permalink Submitted by Alan Spross on Fri, 2009-12-11 19:36
Definitely so. Any good trust attorney should know how to produce a qualified trust as most of them are indeed qualified, but the basic RLT now involves so many protective clauses in it that trying to draft or amend a trust is no longer a do it yourself project. It is also important to note the deadlines on p 39 for getting the trust to the IRA custodian.
Permalink Submitted by Kevin DeNardo on Fri, 2009-12-11 19:42
Thank you both – all the best this Holiday season!
Permalink Submitted by Bruce Steiner on Sun, 2009-12-13 00:25
You have to make sure that no money distributed from the IRA to the trust and retained in the trust can ever go to anyone older than the person whose life expectancy you want to use for purposes of the stretchout.
The lawyer handling your estate planning should be able to draft it.
Bruce Steiner, attorney
NYC
also admitted in NJ and FL
Permalink Submitted by Kevin DeNardo on Mon, 2009-12-14 15:30
Thank You Bruce!