Permalink Submitted by Alan - IRA critic on Wed, 2015-01-21 23:10
You cannot put your IRA into the trust, but you can name a trust as your IRA beneficiary. If you do, the trust must meet some requirements to be considered qualified for look through treatment. That means that the oldest beneficiary of your trust could use their age to determine the RMD for the IRA. The trustee of the trust must understand what needs to be done with respect to the IRA. A trust tax return Form 1041 must be filed annually. The trust can shield the IRA from creditors including spouses and is therefore helpful for beneficiaries with potential creditor problems. Inherited IRAs left directly to the beneficiary is only protected against creditors in the handful of states that have passed specific statutes to protect them.
Permalink Submitted by Bruce Steiner on Thu, 2015-01-22 04:03
You can’t name a trust for yourself as beneficiary of your IRA since you’ll be dead when your IRA becomes payable to your beneficiaries. However, you can name a trust or trusts that you create for one or more other persons as beneficiary or beneficiaries. For more on trusts as beneficiaries of retirement benefits, see my article on this subject in the March 2004 issue of BNA Tax Management’s Estates, Gifts & Trusts Journal: http://www.kkwc.com/docs/AR20041209132954.pdf.
Permalink Submitted by Alan - IRA critic on Wed, 2015-01-21 23:10
You cannot put your IRA into the trust, but you can name a trust as your IRA beneficiary. If you do, the trust must meet some requirements to be considered qualified for look through treatment. That means that the oldest beneficiary of your trust could use their age to determine the RMD for the IRA. The trustee of the trust must understand what needs to be done with respect to the IRA. A trust tax return Form 1041 must be filed annually. The trust can shield the IRA from creditors including spouses and is therefore helpful for beneficiaries with potential creditor problems. Inherited IRAs left directly to the beneficiary is only protected against creditors in the handful of states that have passed specific statutes to protect them.
Permalink Submitted by Bruce Steiner on Thu, 2015-01-22 04:03
You can’t name a trust for yourself as beneficiary of your IRA since you’ll be dead when your IRA becomes payable to your beneficiaries. However, you can name a trust or trusts that you create for one or more other persons as beneficiary or beneficiaries. For more on trusts as beneficiaries of retirement benefits, see my article on this subject in the March 2004 issue of BNA Tax Management’s Estates, Gifts & Trusts Journal: http://www.kkwc.com/docs/AR20041209132954.pdf.