Trust as successor beneficiary of an inherited ira
Thought I knew the answer to this but can’t find anything to confirm.
IRA participant dies having named a non-spouse individual as IRA beneficiary. Beneficiary begins taking minmium distributions. Beneficiary names beneficiary’s revocable trust as successor beneficiary of the now inherited IRA. Beneficiary dies a few years later. Must the revocable trust (now irrevocable at death) be qualify with all the look through provision rules that would have been required if the trust had been named beneficiary by the participant? Could the trust have multiplate beneficiaries and generally accumulate distributions without any problems?
Permalink Submitted by Alan Spross on Thu, 2012-09-13 18:42
It should not matter if the trust is qualified or not because the RMD method used by the designated beneficiary must continue when RMDs are paid to the trust (divisor continues to be reduced by 1.0 in each successive year). If the 5 year rule was elected, that election would also apply to the trust.
The trust provisions should determine the duties of the trustee with respect to administering the RMDs or additional distributions. If the RMDs are accumulated in the trust, the higher compressed tax rates of the trust will apply to the distributions.