Trust as beneficiary
Grantor of revocable trust names the trust as beneficiary of his IRA. Grantor,age 62, passed away September 2014. Trust is now irrevocable and qualifies as look through trust.Vehicle chosen to receive assets of IRA is a Fixed Index Annuity. Trust is owner of annuity. Eldest beneficiary is 63 so RMD will be based on that age.Questions: Whom may we name as Annuitant? Whom do we name as beneficiary? The trust makes no mention of that contingency.
Permalink Submitted by Alan - IRA critic on Tue, 2014-12-02 17:53
The trust is the inherited IRA beneficiary, and should contain provisions regarding the beneficiaries, remainder beneficiaries if any and successor beneficiaries if any. One of the requirements for a trust to qualify for look through treatment is that the beneficiaries of the owners interest must be identifiable. If the oldest beneficiary including remainder beneficiaries of this trust is 63 and if the trust is qualified, the RMD is locked in and an annuitized contract will need to pay out enough to meet the RMD. If the trustee has the power to select an annuitant younger than 63, the payments will be insufficient to meet the RMD. The insuror may simply require the trust beneficiary on whose age the RMD is determined to be the annuitant so that the RMD is satisfied.